Editor’s Note: This story originally appeared on Smartest dollar.
Pent-up demand due to the coronavirus pandemic, low interest rates and shortage of properties have created a booming housing market with levels of refinancing activity. While the values ​​of typical houses have increase By 15% from a year ago, the housing market is expected to remain warm in many cities through the end of the year and into next year. According to the most recent mortgage data at the lending level of the Home Mortgage Disclosure Actt, there were 12.1 million mortgage applications approved in 2020 with an overall approval rate of 83.6%.
Mortgage approval rates vary depending on the purpose of the loan. Classic single-family loan refinancing applications with no opt-out had the highest approval rate at 86.9%. Home purchase loans had an almost identical approval rate at 86.3%, and cash refinancing applications were slightly less likely to be approved, with an approval rate of 84.9%. Compared to these types of loans, home improvement loans were the least likely to be approved – only 61% of home improvement loans were approved in 2020.
Mortgage loan approval rates vary not only by the purpose of the loan, but also by the demographics of the applicant, including race and ethnicity. Co-applicants of different races (“joints”) and non-Hispanic white applicants had the highest loan approval rates, both at 86.1%. Blacks, Native Americans or Alaska Natives, and applicants from two or more minority races experienced the lowest approval rates, ranging from 65.8% to 69.4%. The loan approval rate for Hispanic or Latino applicants was 74.8% – a higher figure than for other minority groups, but still 11 percentage points lower than the approval rate for white borrowers.
The differences in loan approval rates are in part due to variation in credit profiles and types of applications across racial and ethnic groups. Members of minority groups are more likely to have lower income, lower credit scores, and live in economically disadvantaged neighborhoods. Yet research indicates a persistence discrimination in the loan market, and that even controlling for differences in financial health, minorities are denied loans at higher rates than their white counterparts.
Large subways with the highest loan approval rates
Approval rates are highest in the Midwest, while they tend to be lowest in the South and Southeast. This is probably due to differences in local demographic makeup and socioeconomic status. At 90.6% and 90.1%, respectively, residents of North Dakota and South Dakota had the highest loan approval rates in the country. On the other end of the spectrum, residents of Mississippi and Florida faced the lowest loan approval rates, at just 74.7% and 77.1%, respectively.
To find the locations with the highest loan approval rates, Smartest Dollar researchers analyzed the latest data from the Federal Financial Institutions Examination Council. Home Mortgage Disclosure Act, the US Census Bureau and Zillow. Researchers ranked subways based on mortgage approval rates. The researchers also calculated the total number of loan applications approved, the median house price, the median household income, and the share of the minority population – defined as the percentage of the population who are not non-Hispanic Caucasians. .
To improve relevance, only metropolitan areas with at least 100,000 inhabitants were included in the analysis.
Here are the major metropolises (1 million people or more) with the highest loan approval rates.
15. Phoenix-Mesa-Chandler, AZ
- Mortgage Approval Rate: 86.9%
- Total approved loan requests: 299 785
- Median house price: $ 367,484
- Median household income: $ 67,896
- Share of the minority population: 45.5%
14. Raleigh-Cary, North Carolina
- Mortgage Approval Rate: 87.2%
- Total approved loan applications: 81,117
- Median house price: $ 333,255
- Median household income: $ 80,096
- Share of the minority population: 39.3%
13. Milwaukee-Waukesha, WI
- Mortgage Approval Rate: 87.4%
- Total approved loan requests: 78,032
- Median house price: $ 237,009
- Median household income: $ 65,845
- Share of the minority population: 34.1%
12. San José-Sunnyvale-Santa Clara, California
- Mortgage Approval Rate: 87.4%
- Total approved loan applications: 106,692
- Median house price: $ 1,384,778
- Median household income: $ 130,865
- Share of the minority population: 69.5%
11. Boston-Cambridge-Newton, MA-NH
- Mortgage Approval Rate: 87.4%
- Total approved loan requests: 240,213
- Median house price: $ 573,182
- Median household income: $ 94,430
- Share of the minority population: 30.8%
10. Sacramento-Roseville-Folsom, California
- Mortgage Approval Rate: 87.6%
- Total approved loan applications: 141,741
- Median house price: $ 516,489
- Median household income: $ 76,706
- Share of the minority population: 48.7%
9. Denver-Aurora-Lakewood, CO
- Mortgage Approval Rate: 87.7%
- Total approved loan requests: 226,051
- Median house price: $ 529,969
- Median household income: $ 85,641
- Share of the minority population: 36.5%
8. Grand Rapids-Kentwood, MI
- Mortgage Approval Rate: 87.8%
- Total approved loan applications: 55,182
- Median house price: $ 260,442
- Median household income: $ 65,739
- Share of the minority population: 22.1%
7. Indianapolis-Carmel-Anderson, IN
- Mortgage Approval Rate: 87.8%
- Total approved loan requests: 102,323
- Median house price: $ 216,944
- Median household income: $ 62,502
- Share of the minority population: 28.7%
6. Seattle-Tacoma-Bellevue, WA
- Mortgage Approval Rate: 87.8%
- Total approved loan applications: 249,869
- Median house price: $ 632,585
- Median household income: $ 94,027
- Share of the minority population: 38.3%
5. Kansas City, MO-KS
- Mortgage Approval Rate: 87.9%
- Total approved loan requests: 91,428
- Median house price: $ 244,048
- Median household income: $ 70,215
- Share of the minority population: 28.0%
4. Salt Lake City, Utah
- Mortgage Approval Rate: 88.0%
- Total approved loan applications: 91 754
- Median house price: $ 486,928
- Median household income: $ 80,196
- Share of the minority population: 29.2%
3. Portland-Vancouver-Hillsboro, OR-WA
- Mortgage Approval Rate: 88.3%
- Total approved loan applications: 150 164
- Median house price: $ 496,162
- Median household income: $ 78,439
- Share of the minority population: 27.7%
2. Saint-Louis, MO-IL
- Mortgage Approval Rate: 88.4%
- Total approved loan requests: 126,136
- Median house price: $ 209,683
- Median household income: $ 66,417
- Share of the minority population: 26.6%
1. Minneapolis-St. Paul-Bloomington, Minnesota-WI
- Mortgage Approval Rate: 89.3%
- Total approved loan requests: 208,558
- Median house price: $ 337,255
- Median household income: $ 83,698
- Share of the minority population: 25.4%
Detailed results and methodology
The large metropolises with the highest loan approval rates are primarily located in the Midwest and West and have approval rates ranging from 86.9% to 89.3%. While median house prices vary widely in the large metropolises with the highest approval rates Рfrom a low of $ 210,000 to nearly $ 1.4 million Рthe median household income is above the national median of $ 66,000. With the exception of Phoenix, San Jos̩ and Sacramento, the percentages of the minority population are below the national level of 40%.
Small and mid-size subways with the highest loan approval rates are also mainly distributed in the Midwest and West. Loan approval rates in these cities are 94%. Median house prices and median household income in some of these metros are lower than the national level; however, all of these metros have smaller than average minority populations.
To find the locations with the highest loan approval rates, Smartest Dollar researchers analyzed the latest data from the Federal Financial Institutions Examination Council. Home Mortgage Disclosure Act, the United States Census Bureau U.S. Community Survey 2019, and Zillow Zillow Home Value Index. Researchers ranked subways based on mortgage approval rates. In the event of a tie, the metro with the most mortgage approvals was ranked higher. The researchers also calculated the median home price, the median household income, and the share of the minority population, defined as the percentage of the population that is not non-Hispanic Caucasian.
Only conventional single-family mortgage applications were taken into account in the analysis. In calculating approval rates, withdrawn and incomplete applications as well as purchased loans were excluded.
To improve relevance, only metropolitan areas with at least 100,000 inhabitants were included in the analysis. In addition, metropolitan areas have been grouped into the following cohorts based on population size:
- Small metros: 100,000-349,999
- Mid-size subways: 350,000 to 999,999
- Major metros: 1,000,000 or more
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