Date Available
5-28-2025
Year of Publication
2025
Document Type
Graduate Capstone Project
Degree Name
Master of Public Policy
College
Graduate School
Department/School/Program
Public Administration
Faculty
Dr. Caroline Weber
Committee Member
Dr. Annelise Russell
Faculty
Dr. Cory Curl
Abstract
Researchers have studied the disparities of the mortgage lending process extensively, but their research fails to examine the process following the COVID-19 pandemic. Throughout the aftermath of the pandemic, home sale prices increased, interest rates rose, and rental costs skyrocketed. As such, the housing landscape changed drastically, and research must be conducted to assess new trends and relationships. In this report, I will estimate the relationship between applicant characteristics, such as race, debt-to-income ratio, and income and the outcome of their mortgage loan application and their expected credit score. Prior to COVID-19, Black and White applicants for mortgage loans were approved at significantly different rates, and the same results are true post-COVID. After conducting two regression analyses, this research report finds that lenders are 8.4 percentage points less likely to approve Black applicants than similar White applicants. Because access to a mortgage loan often leads to homeownership, Black people are less likely to achieve homeownership than similar White people. To address the mortgage approval disparity between Black and White applicants, thereby addressing the homeownership gap between Black and White people, this report suggests that alternative data be introduced into the mortgage lending process. Moreover, by including basic cash flow information, mortgage applications can more accurately reflect an applicant’s ability to repay the loan, providing Black applicants more opportunities to be assessed favorably.
Recommended Citation
Owen, Zachary, "Mortgage Lending Discrimination: Racial Differences in a Post-COVID Society" (2025). MPA/MPP/MPFM Capstone Projects. 463.
https://uknowledge.uky.edu/mpampp_etds/463
