Minority residents in the United States have historically been met with discriminatory lending practices. For example, redlining denied credit and other financial services to residents in nonwhite neighborhoods. New analysis from the IU Public Policy Institute finds inequities still exist when it comes to home loan lending.
“Owning a home is one of the most important ways families can build wealth and increase their financial security,” says Joti Martin, a policy analyst at the IU Public Policy Institute. “Yet for far too many families of color, the dream of homeownership may still be out of reach because of inequities in home lending practices.”
Martin recently led a team of analysts who examined home loan denials in majority-Black neighborhoods in Marion County, Indiana.
About 1 in 5 people in Marion County live in a neighborhood where most residents are Black. People in these majority-Black areas often face barriers to homeownership, including lower incomes and higher poverty rates. They also face challenges when trying to secure a loan to buy a new home or improve or repair their current home.
The county’s homeownership rate sits at 54 percent but dips to 42 percent in its majority-Black neighborhoods—even though homes in these areas are typically cost less than the average Marion County home.