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Press Release

Home loan outcomes vary by race, income, and county, according to a Cleveland Fed analysis of HMDA data for Cuyahoga County, Ohio, and Allegheny County, Pennsylvania

The rate of mortgage originations was markedly higher in 2015 than it was in 2005 in both Cuyahoga County, home to Cleveland, and Allegheny County, home to Pittsburgh. But home loan activity in recent years varies by race, income, and county, according to two reports and a related Forefront article published by the Federal Reserve Bank of Cleveland.

Using Home Mortgage Disclosure Act (HMDA) data to examine trends in mortgage lending, Lisa Nelson, a community development advisor at the Bank, and Matthew Klesta, a policy analyst, find that:

  • While the gap in home purchase origination rates for blacks and whites has narrowed since 2010, low- and moderate-income (LMI) black borrowers were less likely than LMI white borrowers to get approved for a home purchase loan, regardless of borrower income and the income of the neighborhood in which they sought to buy. Nelson says the HMDA data doesn’t provide information about borrowers’ credit scores or their debt-to-income ratios, information that could help to explain these differences. However, researchers at the Board of Governors found that declines in home purchase lending since 2006 are mainly due to less lending to lower-credit-score borrowers, regardless of race. “According to the Board’s research, black borrowers tend to have lower credit scores than white borrowers, so it follows that the declines in home purchase lending were greater for black borrowers than white borrowers after the Great Recession,” says Nelson.
  • Refinancing home loans while interest rates were historically low occurred more in higher-income neighborhoods than in lower-income neighborhoods. In the years immediately following the recession (2010 and 2011), high-income neighborhoods accounted for more than 60 percent of the home loan refinance activity in Cuyahoga County and Allegheny County. Nelson says deteriorating housing values plus tightened lending standards during and after the recession may have impacted the ability of some homeowners to refinance their homes, particularly in the LMI areas within the counties.
  • From 2005 to 2015, in both Cuyahoga and Allegheny Counties, the share of low- and moderate-income borrowers buying in higher-income areas went up while the share of purchases in LMI neighborhoods for all race and income groups dropped. In Cuyahoga County, for example, 52 percent of black LMI borrowers and 80 percent of white LMI borrowers purchased homes in non-LMI neighborhoods in 2015, up from 22 percent and 71 percent, respectively, in 2005. Klesta says the uptick in Cuyahoga County may be the result of depressed housing prices, which could have allowed more borrowers to afford houses in areas that might have been unaffordable previously. Another driver of LMI borrowers’ loan activity may be the first-time homebuyer tax credit enacted in 2008 and available to qualified borrowers through mid-2010.
  • Allegheny County’s origination rates are higher than Cuyahoga County’s across all years examined, loan types, and neighborhood income groups with the exception of 2005. During that year, Cuyahoga County had higher refinance origination rates in all neighborhood income types. Nelson and Klesta suggest the differing outcomes could be explained, in part, by lower credit scores and higher debt-to-income ratios, among other characteristics that lenders take into account when deciding whether to extend credit. “Overall in Allegheny County, the median incomes are higher,” says Klesta. He notes that more than half of the census tracts in Cuyahoga County are low and moderate income compared to just over a third of the tracts in Allegheny County. “Allegheny County also didn’t experience the steep drop-off in housing prices that Cuyahoga County and the nation did between 2000 and 2016,” says Klesta. “Stable home equity tends to make it more possible for a homeowner to refinance.”

For more results, see:

To examine trends in mortgage lending for other US metro areas, check out the Home Mortgage Explorer, a new tool developed by the Cleveland and Philadelphia Feds.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.218.1892