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Housing and Homelessness

Asian Americans Are Being Denied Mortgages At 'Surprising' Rates Despite Strong Credit

A green and blue and white real estate sign is seen in front of a house for sale in West Los Angeles.
Prospective Asian American homebuyers are seeing higher mortgage denial rates than white applicants with worse credit.
(CHRIS DELMAS/AFP via Getty Images
/
AFP)
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As Asian Americans grow in population, so has the number of those buying homes. Yet their home ownership rates, along with other communities of color, still significantly lag white households — 57% in the case of Asian American households in 2018, compared with 72% for their white cohort.

While language barriers are viewed as a hurdle for some, a new analysis indicates that so is getting a mortgage.

Using 2019 banking data, the Urban Institute found that Asian mortgage applicants face higher denial rates than white applicants, despite having stronger credit scores and higher incomes.

“We find the results pretty surprising and pretty counterintuitive too,” said research associate Linna Zhu.

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The institute’s researchers examined mortgage denial rates around the country and calculated that 8.7% of Asian mortgage applicants were rejected, compared with 6.7% of white applicants.

This pattern was observed in 48 out of 50 major metropolitan areas. (In Albany, N.Y. and Pittsburgh, mortgages from Asian applicants were approved at a higher rate than white applicants.)

In California, the gap was as high as five percentage points in the Stockton area, while non-existent in the Thousand Oaks-Ventura area.

ASIAN MORTGAGE STUDY
The Asian-white denial rate gap for mortgages.
(The Urban Institute)

Regionally, there was also a range. Nearly 11% of Asian applicants in the Inland Empire were denied mortgages in 2019, compared to just under 8% of white applicants. In the L.A. area, the disparity was smaller — just over half a percentage point.

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Zhu said that “might be indicative of systemic discrimination toward Asian applicants. If that’s the case, then policymakers need to really recalibrate the current underwriting system.”

Zhu is calling for more research on this finding for Asian Americans — a population the institute maintains has been long left out of housing data and analysis.

Have a question about Southern California's Asian American communities?
Josie Huang reports on the intersection of being Asian and American and the impact of those growing communities in Southern California.