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Community Development Reports

An Uneven Recovery: Home Lending in the Fourth District by Race and Income

Nearly 10 years into the economic recovery, home mortgage lending in the Fourth Federal Reserve District (Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia) still remains affected by the Great Recession. In this brief, we highlight key findings from the seven county-specific home lending reports we published in the A Look Behind the Numbers series. Specifically, we document the differences across the seven counties, focusing on the recovery in low- and moderate-income (LMI)1 neighborhoods and among white borrowers and black borrowers.

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.

Summarizing home lending conditions across the seven counties—Allegheny, Pennsylvania (Pittsburgh); Cuyahoga, Ohio (Cleveland); Fayette, Kentucky (Lexington); Franklin, Ohio (Columbus); Hamilton, Ohio (Cincinnati); Lucas, Ohio (Toledo); and Montgomery, Ohio (Dayton)—two main findings emerge from our analysis:

  1. Application rates in the seven counties’ LMI neighborhoods decreased sharply as the Great Recession took hold and remain well below the prerecession rates, yet the rate of loans moving from application to origination in LMI neighborhoods has broadly increased since the recession and now exceed prerecession rates.
  2. In every county examined, black borrowers experienced larger declines in home purchase rates than white borrowers did from 2005 to 2010. Although home purchase rates increased from 2010 to 2016 for both races, the gains were lower among black borrowers when compared to their white counterparts. This race disparity persists regardless of borrower income.

It is important to note the data used in these analyses do not include all of the factors lenders use to determine the creditworthiness of the borrower.2Also, each household must evaluate whether it is better off renting or buying. It is our intent to highlight mortgage patterns in the District’s major counties so that policymakers and regulators are aware of home lending disparities and may use the data when examining the effects of the Great Recession.

  1. Low income: Median family income for the census tract (or borrower income) is less than 50 percent of the MSA’s median family income. Moderate income: Median family income for the census tract (or borrower income) is greater than or equal to 50 percent but less than 80 percent of the MSA’s median family income. Return to 1
  2. Researchers at the Federal Reserve Board of Governors found that the declines in home purchase lending since 2006 are mainly due to less lending to lower-credit score borrowers, regardless of race, see FEDS Notes article at Return to 2
Suggested Citation

Herman, Logan, and Lisa A. Nelson. 2018. “An Uneven Recovery: Home Lending in the Fourth District by Race and Income.” Federal Reserve Bank of Cleveland, Community Development Reports.