Number of minority home buyers in US down in 2006
Wednesday, 24 October 2007
Amy Hoak
The total number of minority home buyers who took out a mortgage dropped 7.1% in 2006, led by a 21.5% decrease in the number of Asian-American buyers. But the number of African-American home buyers actually rose slightly last year, reflecting a 0.6% increase over 2005, according to a study released on Thursday.
The 2007 Annual Minority Lending Report, released by Compliance Technologies and Genworth Financial, also revealed that about four of every 10 home-purchase mortgages taken out by minorities in 2006 were subprime loans -- more than double the number of subprime loans taken out by white borrowers. While 39.1% of mortgages to minorities were subprime, 18% of mortgages to whites were subprime.
Forty-eight percent of mortgages made to African-Americans were subprime loans -- the highest share of subprime mortgages for any minority group, the study found.
"The momentum we've been seeing in minority home buying unfortunately came to a halt in 2006," said Maurice Jourdain-Earl, managing director of Compliance Technologies, in a news release. The level of subprime lending to minorities was "troubling," he added.
The drop in minority home buying has much to do with the issue of affordability in many markets, as buyers increasingly struggled to get into homes after the massive appreciation rates of the boom years, said Lori Jones Gibbs, vice president of affordable housing/industry affairs for Genworth, during a telephone interview. Another factor: At the end of 2006, consumers started pausing after hearing news about market conditions.
"When you hear stories about people losing their homes ... you're going to be a little more cautious," taking the opportunity to learn more before jumping into a mortgage, she said.
The slight rise in African-American home buyers likely has a connection to the high number of those in the group who got subprime mortgages, deciding to buy even if it meant getting a high-cost loan, Gibbs said. But she also thinks there's another reason: "a growing, middle class, African-American population that is not only buying first homes, but is also educating their children to be homeowners as soon as possible."
The figures came from an analysis of Home Mortgage Disclosure Act data, and were released during the third annual Mortgage Lending Industry Emerging Markets and Diversity Conference, being held in Arlington, Va. The meeting "will explore ways to increase minority home buying with an emphasis on safe, secure solutions," said Kevin Schneider, president of Genworth's U.S. mortgage insurance business. Visit the conference Web site.
Other findings in the analysis included:
l Home buying among Hispanics declined 5.2% from 2005 to 2006, even though the group outpaced all minority groups in the number of home-purchase loans. Hispanics took out 692,014 home-purchase mortgages in 2006, according to the group, followed by African-Americans, who took out 448,082. North Carolina had the strongest positive growth of Hispanic home buyers, with a 21.6% increase over 2005.
l The number of African-American home buyers increased in 26 states and territories in 2006, while only five states showed an increase among white buyers. But in 12 states, more than half of all mortgage loans to African Americans were subprime, led by Michigan, where 70.7% of loans to African Americans were subprime in 2006.
l About 17% of mortgages made to Asian Americans in 2006 were subprime -- below the percentage of whites that received subprime mortgages. The state with the largest drops in home buying from this group was Virginia, where the number of Asian-American home buyers decreased 44.8%.
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MarketWatch
The total number of minority home buyers who took out a mortgage dropped 7.1% in 2006, led by a 21.5% decrease in the number of Asian-American buyers. But the number of African-American home buyers actually rose slightly last year, reflecting a 0.6% increase over 2005, according to a study released on Thursday.
The 2007 Annual Minority Lending Report, released by Compliance Technologies and Genworth Financial, also revealed that about four of every 10 home-purchase mortgages taken out by minorities in 2006 were subprime loans -- more than double the number of subprime loans taken out by white borrowers. While 39.1% of mortgages to minorities were subprime, 18% of mortgages to whites were subprime.
Forty-eight percent of mortgages made to African-Americans were subprime loans -- the highest share of subprime mortgages for any minority group, the study found.
"The momentum we've been seeing in minority home buying unfortunately came to a halt in 2006," said Maurice Jourdain-Earl, managing director of Compliance Technologies, in a news release. The level of subprime lending to minorities was "troubling," he added.
The drop in minority home buying has much to do with the issue of affordability in many markets, as buyers increasingly struggled to get into homes after the massive appreciation rates of the boom years, said Lori Jones Gibbs, vice president of affordable housing/industry affairs for Genworth, during a telephone interview. Another factor: At the end of 2006, consumers started pausing after hearing news about market conditions.
"When you hear stories about people losing their homes ... you're going to be a little more cautious," taking the opportunity to learn more before jumping into a mortgage, she said.
The slight rise in African-American home buyers likely has a connection to the high number of those in the group who got subprime mortgages, deciding to buy even if it meant getting a high-cost loan, Gibbs said. But she also thinks there's another reason: "a growing, middle class, African-American population that is not only buying first homes, but is also educating their children to be homeowners as soon as possible."
The figures came from an analysis of Home Mortgage Disclosure Act data, and were released during the third annual Mortgage Lending Industry Emerging Markets and Diversity Conference, being held in Arlington, Va. The meeting "will explore ways to increase minority home buying with an emphasis on safe, secure solutions," said Kevin Schneider, president of Genworth's U.S. mortgage insurance business. Visit the conference Web site.
Other findings in the analysis included:
l Home buying among Hispanics declined 5.2% from 2005 to 2006, even though the group outpaced all minority groups in the number of home-purchase loans. Hispanics took out 692,014 home-purchase mortgages in 2006, according to the group, followed by African-Americans, who took out 448,082. North Carolina had the strongest positive growth of Hispanic home buyers, with a 21.6% increase over 2005.
l The number of African-American home buyers increased in 26 states and territories in 2006, while only five states showed an increase among white buyers. But in 12 states, more than half of all mortgage loans to African Americans were subprime, led by Michigan, where 70.7% of loans to African Americans were subprime in 2006.
l About 17% of mortgages made to Asian Americans in 2006 were subprime -- below the percentage of whites that received subprime mortgages. The state with the largest drops in home buying from this group was Virginia, where the number of Asian-American home buyers decreased 44.8%.
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MarketWatch