Home Lending Trends from Select Counties in Kentucky, Ohio, and Pennsylvania: 2018–2022

While the mortgage lending environment functioned relatively normally during 2018–2019, 2020–2021 saw historically low interest rates amid a worldwide pandemic and 2022 saw the cost of borrowing increase because of swiftly rising interest rates. For each county, we examine differences by race (Black and white)¹ and income (low-and moderate-income (LMI) and middle- and upper-income (MUI)).² Data are from the Home Mortgage Disclosure Act (HMDA). More information on the HMDA can be found here: What is HMDA and why is it important? While each county has a unique mortgage lending environment and appears slightly different in the data, some broad themes and trends emerge.

Key findings across the seven counties

• Large increases in home purchases by Black borrowers: From 2018 through 2021, home purchase originations tended to increase for all race and income groups, with larger increases for Black borrowers in most of the seven counties. Originations fell across all race and income groups in 2022, with the largest declines for LMI borrowers. Nationally, home purchase originations increased more for white borrowers from 2018 through 2021, and the declines in 2022 across all race and income groups were larger than for most of the seven counties.
• Black homeownership rates rose but remained well below white homeownership rates: Increased home purchase originations by Black borrowers contributed to higher Black homeownership rates, which reached 36.4 percent across the seven counties in 2022 (up 3.2 percentage points from 2018). The white homeownership rate increased by 3.7 percentage points during the same period, and the gap between Black and white homeownership rates remained wide at 38.9 percentage points in 2022 versus 29.4 percentage points nationally.
• Increased home prices, higher interest rates, and slower income growth made borrowing more expensive:
  • Median loan and median income³: From 2018 through 2021, median loan amounts in many of the seven counties increased, while in 2022, they leveled out or even declined slightly. However, median incomes increased markedly slower from 2018 through 2022, even declining for some race and income groups. A similar trend was seen nationally.
  • Debt-to-income ratio: The shares of home purchase applicants in the seven counties with debt-to-income ratios of above 36 percent have been rising for all borrower groups since 2020 but have been below the national shares across all race and income groups.
  • Cost burden: The estimated monthly housing costs as a share of income have increased for all borrower groups since 2020.
• Sharp decrease in refinance originations as interest rates rose in 2022: Refinance originations across the seven counties increased from 2018 through 2021, particularly for white MUI homeowners in 2020 and for Black LMI homeowners in 2021. In 2022, refinance originations declined precipitously across all race and income groups as interest rates rose. These were similar to the national trends.