Home Lending in Cuyahoga County Neighborhoods
We begin our report on Cuyahoga County, home to the city of Cleveland, with a broad look at application and origination activity over the past 25 years (1990–2015), and then focus on the 12-year period from 2004 to 2015. Using maps and a series of figures and tables, we tell the story of mortgage lending over these time periods from both the neighborhood and borrower perspectives, with a particular focus on highlighting the differences observed in the pre- and post-Great Recession periods.
- Prior to the Great Recession, home mortgage application rates were significantly higher in Cuyahoga County’s low- and moderate-income (LMI) neighborhoods compared to the county’s non-LMI neighborhoods. As the Great Recession took hold, application rates fell sharply in these lower-income areas, dropping below rates in the non-LMI neighborhoods, a reversal of the pre-recession trend.
- Application rates fell by 86 percent in low-income neighborhoods and by 75 percent in moderate-income neighborhoods from 2004 to 2015. Nationally, the trends were similar but the declines not as large: low-income neighborhoods’ application rates fell by 75 percent and moderate-income neighborhoods’ by 68 percent over this same time period.
- Origination rates have increased in each neighborhood income group since the Great Recession. By 2015, origination rates had recovered from their low point in each neighborhood income group, and—with the exception of the low-income neighborhoods—these 2015 rates exceeded origination rates in the pre-Great Recession period.
- Since the Great Recession, it appears homeowners living in high-income neighborhoods have been better able to take advantage of low interest rates to refinance their homes. As of 2009, more than half of all refinance originations in Cuyahoga County occurred in high-income neighborhoods; in 2015 the share fell to just below 50 percent.
- We find white borrowers are proportionally more likely than black borrowers to get a home purchase loan in every year we examined. In 2005, there were 58 home purchase loans by white LMI borrowers for every 1,000 white LMI households compared to just 37 home purchase loans by black LMI borrowers for every 1,000 black LMI households. While the rates declined for both races from 2005 to 2010, these declines were significantly higher for black LMI borrowers than for white LMI borrowers: 72 percent compared to 53 percent. Home purchase loan rates did increase from 2010 to 2015 for both races, but the gains were considerably lower for black LMI and black non-LMI households compared to their white counterparts. Home purchase loan rates increased by 6 percent for black LMI households compared to 26 percent for white LMI households from 2010 to 2015.
- The shares of home purchase loans made in LMI neighborhoods declined from 2005 to 2010 for both black and white borrowers. Declines were greater for black borrowers, dropping by 28 percentage points to 39 percent in 2010. By comparison, the shares fell just 7 percentage points to 11 percent for white borrowers in 2010. However, black borrowers regardless of income are more likely to purchase a home in an LMI neighborhood when compared to their white counterparts. The share of black borrowers purchasing in LMI neighborhoods is more than three times the share of white borrowers purchasing in LMI neighborhoods in each year examined.
The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.