PCRG study shows mortgage lenders continue to disproportionately fail Black borrowers

MEDIA RELEASE
March 27, 2023

Pittsburgh, PA — Most mortgage lenders in Allegheny County favor white home loan applicants, despite income levels, over upper-income Black residents, according to the Pittsburgh Community Reinvestment Group’s latest study. The recently released report examined lending practices of banks, credit unions, and mortgage companies in Allegheny County from 2018 to 2021. It found that mortgage companies had the highest rates of loans issued to Black borrowers. Meanwhile, all area banks approved more loans to low-income white borrowers than they did upper-income, Black borrowers.

“This valuable research allows community organizations and local governments to make data-driven decisions on which institutions to bank with,” PCRG Executive Director Ernie Hogan said. “We want to highlight institutions that are good community partners, and those that aren’t putting their money where their mouths are when it comes to investing equitably and in our most underserved neighborhoods.”

John Boyle, PCRG’S research analyst and author of the report, said discriminatory lending practices are reflected in the city’s growing racial homeownership gap.

“Years of systemic barriers kept Black borrowers out of the financial system,” Boyle said. “The longstanding practices appear, anecdotally, to have resulted in psychological barriers, like a lack of trust in banking.”

Boyle said, as a result, people could turn to other avenues, like predatory, online lenders with exorbitant interest rates — possibly resulting in a downward financial spiral. Without the implementation of race-based lending requirements, financial institutions will continue to gatekeep Black residents from homeownership.

Findings from this study helped guide PCRG’s policy recommendations aimed at tackling systemic barriers that face marginalized communities. Those include a push to change federal law and add race-based lending requirements that could boost opportunities for Black and other borrowers of color.

Read PCRG’s latest Mortgage Lending Study and explore the accompanying interactive data component.