House Rich, Poor Access: Ethno-Racial and Creditworthiness Inequality in the U.S. Refinance Mortgage Market

Homeownership remains a central mechanism through which ethno-racial stratification is produced and maintained in the United States. While prior research has documented the disadvantages minority households face in accessing homeownership, limited attention has been paid to the challenges they face in the mortgage refinancing market. Moreover, existing studies fail to account for variations in creditworthiness when assessing outcomes in the refinance market. Utilizing 2021 Home Mortgage Disclosure Act (HMDA) data, this study examines ethno-racial disparities in mortgage refinancing outcomes across debt-to-income (DTI) levels. Findings indicate that Black and Latino applicants experience disproportionately high rates of loan denial and high-cost refinance loans relative to similarly situated White applicants. Depending on the outcome, Asian applicants tend to perform comparably or slightly worse than Whites. Notably, in the case of high-cost refinance loans, Black and Latino applicants with strong creditworthiness perform similarly to, or worse than, White and Asian applicants with below-average creditworthiness.