Refinance mortgage applications surged in 2020 as Delaware, New Jersey, and Pennsylvania homeowners sought to take advantage of declining interest rates during the COVID-19 pandemic. This report explores disparities by applicant race and income in refinance mortgage applications and originations.

Key takeaways:

  • Refinance mortgages grew more than 200 percent in Delaware, New Jersey, and Pennsylvania in 2020. But growth for Black and low- and moderate-income (LMI) homeowners was only about half to three-quarters the level of growth overall.
  • Even though the denial rate for Black and LMI refinance applicants improved, these applicants were still denied at higher rates than applicants overall. A high debt-to-income ratio was the most cited reason that a refinance mortgage was denied to an LMI applicant. For Black applicants, it was credit history.
  • Refinancing a home mortgage can reduce a homeowner’s monthly mortgage payment, put more money into their pockets, and lower the risk of default.
  • Financial institutions and organizations that support homeowners can help create a more equitable financial system by working with Black and LMI homeowners to address the barriers that prevent them from reaping the benefits of refinance mortgages.
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