Home Mortgage Explorer Definitions
Definitions for terms included in the Home Mortgage Explorer.
The Home Mortgage Explorer includes lending statistics for the following geographies:
- United States comprising the contiguous 48 states, the District of Columbia, Alaska, and Hawaii. (Selectable in the state drop down.)
- Metros are metropolitan statistical areas (MSAs) — defined as economic and population centers composed of counties or county equivalents. The Home Mortgage Explorer uses the March 2020 MSA boundaries as established by the U.S. Office of Management and Budget (OMB).1
- Local Areas are helpful for understanding mortgage lending trends in urban neighborhoods. Each Local Area is an individual Public Use Microdata Area (PUMA) — a sub-state geographic area delineated and titled by the U.S. Census Bureau. By definition, each Local Area contains at least 100,000 people. The Home Mortgage Explorer includes Local Areas only within counties containing at least 1 million people. Multiple Local Areas are available for these populous counties. Download this CSV file to see a listing of Local Areas by metro area.
Loan purpose refers to how the mortgage capital will be used by the borrower. Home purchase and home improvement mortgages are intended for the purchase or repair of a home, respectively. Refinance loans are transactions in which a new mortgage pays off and replaces an existing mortgage; the borrower receives a new interest rate and/or loan term and may choose to pull cash out of the home.
- Application Rate: the number of mortgage applications divided by the number of owner-occupied housing units in the location and year selected and multiplied by 1,000. By dividing by owner-occupied housing units, this measure allows for the comparison of application activity across locations of different sizes. The number of owner-occupied housing units for HMDA year 2010 was obtained from the 2008–2012 American Community Survey (ACS) 5-year sample and for HMDA year 2017 from the 2015–2019 ACS 5-year sample. Owner-occupied units were estimated for 2011–2016 and 2018 and later using a cumulative average growth rate extrapolation technique.
- Sample interpretation: Despite their population differences, the Lancaster, PA metro and the Philadelphia metro saw a similar level of application activity in 2021: There were about 46 purchase mortgage applications per 1,000 owner-occupied households in the Lancaster metro, compared with about 58 purchase mortgage applications per 1,000 owner-occupied households in the Philadelphia metro area.
- Originations: the number of mortgages that have been approved and for which loan capital has been issued.
- Sample interpretation: Between 2019 and 2021, the number of refinance loans to low- and moderate-income borrowers in Pennsylvania increased from 31,522 to 73,012 loans, or by 132 percent.
- Denial Rate: the number of denied mortgage applications divided by the sum of the number of originations, approvals that were not originated, and denied applications.
- Sample interpretation: The Black denial rate for purchase mortgages in Delaware declined from 20.9 percent in 2010 to 11.6 percent in 2021 but was still 6.8 percentage points above the White denial rate in 2021.
- Denial Reason: the number of mortgage applications denied for a particular reason divided by the number of denied applications with any reason given. Figures are provided for four common reasons given: an elevated debt-to-income ratio, poor or insufficient credit history, insufficient collateral, or insufficient down payment. Note that a lender can choose to report up to four reasons, with no single reason taking precedence (only up to three reasons in pre-2018 data). As a result, the denial reason frequencies do not sum to 100 percent.
- Sample interpretation: In 2021, a high debt-to-income ratio was more commonly cited as a reason for denial on applications submitted by low- and moderate-income borrowers for properties in New Jersey (48 percent of denied applications) than for properties in Pennsylvania (40 percent of denied applications).
- Loan Volume: the aggregate loan amount — expressed in dollars — of all originated mortgages.
- In 2021, nearly $146 million of mortgage capital was originated to Black borrowers in North Philadelphia.
- Median Loan Amount: the middle loan amount — expressed in dollars — of all originated mortgages.
- The median home improvement loan originated in 2021 in North Philadelphia was $65,000.
- Overall displays a measure’s overall value for a loan purpose in a location and year.
- Applicant or neighborhood income is used to classify mortgage applications, originations, or denials according to the applicant’s income or the median family income (MFI) of the census tract (“neighborhood”) in which the housing unit is located. We take the applicant’s or neighborhood’s income and divide by the MFI of the metro area, the metro division where available, or the state nonmetropolitan area in which the housing unit is located. In more conceptual terms, the ratio describes how the applicant or neighborhood income relates to that of the surrounding area. We classify loans into two income categories based on the Community Reinvestment Act’s definition of the relationship of the applicant’s or neighborhood’s income to the area MFI: low- and moderate-income (< 80 percent of area MFI) and middle- and upper-income (>= 80 percent of area MFI).
One challenge in studying mortgage lending trends by income is that the classification of an applicant or neighborhood into an income category is dependent on the income of the surrounding reference area, and the boundaries of that reference area can change over time. Counties can be added to or removed from metropolitan and nonmetropolitan areas because of changes in population or commuting patterns. As a result, when metro boundaries change, an applicant in one year may be classified differently than a similar applicant in a subsequent year because of the boundary change’s effect on the area MFI.
In order to accurately observe trends in lending, the Home Mortgage Explorer uses the 2020 MSA delineations for each year in the tool. For applicant income, we construct our own measure of area MFI for the 2010 to 2021 period using the 2020 MSA boundaries. To do so, we begin by using binned resident income data from the 2008–2012 ACS 5-year sample for HMDA year 2010 and the 2015–2019 ACS 5-year sample for HMDA year 2017. We perform Pareto interpolation to estimate area MFI in 2010 and 2017 within the 2020 MSA boundaries. We then perform a cumulative average growth rate interpolation technique to estimate area MFI between 2010 and 2017 and similarly extrapolate 2018 and later. For neighborhood income, we use the census tract income categories available in the Federal Financial Institutions Examination Council (FFIEC) 2020 Census Flat File, which relies on the 2011–2015 ACS 5-year sample and is the official source of neighborhood income categories for CRA purposes. We apply that census tract classification to each year in the 2012–2021 period. The period for which lending statistics by neighborhood income are available in the HME begins two years later than for other loan characteristics because census tract boundaries are held largely constant during this period.
- Gender refers to the gender of the primary applicant, when known.
- Race/Ethnicity refers to the race or ethnicity of the primary applicant, when known. We construct mutually exclusive categories: Hispanic, non-Hispanic White, non-Hispanic Black, and non-Hispanic Asian.
- Loan Type specifies whether a federal agency is involved in insuring or guaranteeing the mortgage. By lowering down payment requirements or minimum credit scores, for example, these programs are intended to expand access to credit for borrowers that may have difficulty qualifying for a conventional loan. The federal agency providing the insurance or guarantee is responsible for repaying at least a portion of the loan to the private lender if the borrower cannot. Conventional mortgages are not insured or guaranteed by any federal agency. FHA mortgages are insured by the Federal Housing Administration (FHA), VA mortgages are guaranteed by the U.S. Department of Veterans Affairs (VA), FSA mortgages are guaranteed by the U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA), and RHS mortgages are guaranteed by the USDA’s Rural Housing Service (RHS).
For select measures — denial rate, denial reasons, and median loan amount — values are suppressed when the sample size is fewer than five. This would occur when there are fewer than five applications to determine denial rate, fewer than five denied applications with a reason listed to determine denial reason, and fewer than five originations to determine median loan amount. All suppressed values appear as N/A in the tool.
- The March 2020 MSA delineations are published in OMB Bulletin No. 20-01, available at www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf.