Home Loan Originations
The rate of home improvement and home purchase loans per 1,000 residents in majority-black and majority-white census tracts in the City of St. Louis
There are nearly eight times as many home loan originations per capita in majority-white census tracts as in majority-black census tracts.
A score of 100 represents racial equity, meaning there are no racial disparities in outcomes. The lower the Equity Score, the greater the disparity.
For Home Loan Originations, a score of 100 — a score reflecting racial equity — would mean home loans are equally likely to be originated in majority-black and majority-white neighborhoods. It is important to note that for this indicator, equity is not our only goal; we also want to improve outcomes for all.
What does this indicator measure?
Home Loan Originations measures the rate of home improvement and home purchase loans per 1,000 residents in majority-black and majority-white census tracts in the City of St. Louis. In 2016, there were 5,143 home loans originated in St. Louis, which represents just over 16 home loans per 1,000 people.
Home Loan Originations analysis
Home loan originations per 1,000 people in St. Louis City.
|All||Majority-White census tracts||Majority-Black census tracts||Disparity Ratio||Equity Score|
|Home loan originations||5,143||4,188||446||-||-|
|Home loan originations per 1,000 people||16.3||27.9||3.6||7.830 to 1||9|
Data Source: Home Mortgage Disclosure Act, 2016; American Community Survey 5-year estimates, 2012-2016.
What does this analysis mean?
There are nearly eight times as many home loan originations per capita in majority-white census tracts as in majority-black census tracts. In majority-white areas, there were 4,188 home loan originations for a rate of 27.9 home loans per 1,000 residents in 2016. In diverse areas (neither majority-white or majority-black), there were 509 home loan originations at a rate of 12.4 home loans per 1,000 residents. In majority-black areas, there were only 446 home loans originated, at a rate of 3.6 home loans per 1,000 residents. If home loan originations were equitable, there would have been 3,046 more home loans originated in majority-black areas in 2016.
Why do Home Loan Originations matter?
Home loan originations represent private investment in the housing stock. Home loans issued by financial institutions allow people to purchase and improve their homes. When home loans are not issued in a certain neighborhood as a rule, this is a practice known as redlining. Redlining is illegal today, but its legacy still affects the neighborhoods where it was once legally practiced, as redlining creates a cycle of disinvestment from which it is hard to recover. A history of home loan denials in a neighborhood leads to concentrated disinvestment in properties, and prevents homebuyers from being able to move into a neighborhood because they can’t get a loan. And of course, when a neighborhood looks run down, that discourages people from wanting to move into that neighborhood or to purchase property there. This leads to vacancy, which provides further discouragement to potential residents.
Which Calls to Action from the Ferguson Commission report are linked with this indicator?
The Ferguson Commission prioritizes optimizing existing housing supports. The related calls to action specific to increasing home loan originations include:
Questions for further investigation
- Why is there a racial disparity in Home Loan Originations?
- What can St. Louis do to reduce racial disparities in Home Loan Originations?
- What initiatives are currently underway to reduce racial disparities in Home Loan Originations?
How can I learn more about this issue?
The City of St. Louis Planning Department publishes an annual report on the residential lending activities of the banks that have applied to be City of St. Louis Depositors.
On a more national basis, you can learn more about racial disparities in lending from a series of articles from The Center for Investigative Reporting.