Home Lending in Lucas County Neighborhoods
This report on Lucas County, home to the city of Toledo, Ohio, begins with a broad look at application and origination activity during the past 27 years (1990–2016) and then delves into trends during the 13-year period from 2004 through 2016. Looking at this 13-year period allows us to examine lending activity in the years leading up to and into the Great Recession and to compare that to the lending activity in the years following the Great Recession. Using maps and a series of figures and tables, we tell the story of mortgage lending during these periods from both the neighborhood and borrower perspectives, with a particular focus on highlighting the differences observed in pre- and post-Great Recession periods.
Key Findings
- In the years preceding the Great Recession (2004–2007), home mortgage application rates were higher in northwest Ohio’s Lucas County’s low- and moderate-income (LMI) neighborhoods compared to the county’s non-LMI neighborhoods. In 2008, at the height of the Great Recession, the application rates fell sharply in the LMI areas, dropping below rates in the non-LMI neighborhoods, a change from the pre-Great Recession trend.
- In the post-Great Recession years, application rates in Lucas County’s low-income neighborhoods remained relatively flat, while the middle- and high-income neighborhoods, and, to a lesser degree, moderate-income neighborhoods, experienced jumps in application activity driven mainly by low interest rates and refinance applications. This was similar to the national trend.
- Origination rates across all neighborhood income groups saw slight declines in the years leading up to and including the start of the Great Recession (2004–2008), but the rates jumped more than 10 percentage points in 2009 in all but the low-income neighborhoods, wherein the origination rate increased by 3 percentage points. Focusing on the most recent of years of data, we find origination rates declined in the LMI neighborhoods of Lucas County from 2015 to 2016 but remained virtually unchanged in the non-LMI neighborhoods.
- We find that white borrowers are proportionally more likely to get a home purchase loan than black borrowers, with the exception of non-LMI borrowers in 2005 when the rate was slightly higher for black borrowers. While the rates declined for both races from 2005 to 2010, these declines were significantly larger for black LMI borrowers than for white LMI borrowers: 81 percent compared to 58 percent. In 2016, the home purchase rate for white LMI borrowers was four times the rate for black LMI borrowers, and the rate for white non-LMI borrowers was two times the rate for black non-LMI borrowers.
- The shares of home purchase loans made in LMI neighborhoods declined from 2005 to 2010 for both black borrowers and white borrowers, but the declines were greater for black borrowers, dropping by 38 percentage points from 2005 to 2010. By comparison, the shares fell just 12 percentage points for white borrowers from 2005 to 2010. However, black borrowers, regardless of income, are more likely to purchase a home in an LMI neighborhood compared to their white counterparts; this is true in each year we 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.
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