Part 2 of this series analyzes concerning patterns in lending to low-income and minority borrowers across different loan types and purposes. It also highlights the sharp decline in lending to low-income borrowers, Hispanic borrowers exceeding their population share in lending and the persistent underrepresentation of Black borrowers in the mortgage market.
Jason Richardson, Senior Director, Research, NCRC
Key Takeaways
1
Declining Access for LMI Borrowers: The share of home purchase loans to low- and moderate-income (LMI) borrowers fell to 25.8% in 2024 (down from 26.4% in 2023), reaching its lowest level in recent years.
2
Hispanic Borrower Growth: Hispanic borrowers expanded their presence in the home purchase market to 17.7% (exceeding for the first time their 16.8% population share), positioning them as a growing driver of future homeownership.
3
Persistent Black Homeownership Gap: Black borrowers remained underrepresented at 8.9% of home purchase loans (well below their 11.7% share of the adult population), highlighting continued structural barriers in mortgage access.
4
The Landed Gentry: Wealthy owners and investors dominate mortgage lending even in low-income neighborhoods, capturing homebuying opportunities that were meant for lower-income residents.
Discussion
Building on our findings in Part 1 about the structural shift toward non-bank mortgage companies and the post-pandemic market contraction, this analysis explores lending distribution across different borrower groups in 2024 following those changes.
The 2024 mortgage market continued its adjustment from the COVID-19 pandemic years, showing modest signs of recovery after the severe contraction that followed the 2020-2021 lending boom. While overall volume increased slightly from 2023 levels, the market composition has fundamentally transformed. Home purchase loans now dominate the sector as refinancing activity remains severely depressed, a direct consequence of the interest rate environment we outlined in Part 1.
Lending to LMI borrowers has fallen to its lowest point in recent years. Without immediate action to reverse this trend, homeownership will be solely available to upper-income buyers. This pattern, if it is not quickly reversed, threatens to permanently cleave America into two classes: the landowners who build wealth through home equity and rental income and everyone else. At a certain point this may become irreversible. The landed gentry will hold onto their property fiercely, even while acknowledging the class divide that creates.
Federal Reserve researchers first documented this trend in 2017, finding that from 2010 to 2016, the LMI share among the largest banks fell from 32% to just 15%. They linked this decline to major institutions retreating from FHA lending, which traditionally serves lower-income borrowers.
NCRC’s analysis shows this problem has now expanded market-wide. The share of home purchase loans going to LMI borrowers dropped to just 25.8% in 2024 (down from 26.4% in 2023). This is the lowest level of LMI lending since 2018 – and the share of mortgages going to LMI borrowers seems likely to keep falling for the foreseeable future. Pandemic-era equity gains for existing homeowners mean far more of them can now also invest in a rental home. “Mom-and-pop” investors, as opposed to deep-pocketed financial firms, are the most common type of investor in most cities. These aren’t Wall Street firms with hundreds of homes and complicated algorithms guiding their purchases. They are people and families that were fortunate enough to already be upper income or to own property during the lowest interest rate period in a generation.
This is particularly troubling when considered alongside our finding in Part 1 that mortgage lending tied to government-backed programs, which traditionally serve lower-income borrowers, have declined in their overall market share. The affordability challenges from high home prices, increasing closing costs and rising interest rates have reduced access more severely for lower-income households.
Standard refinance lending remained low throughout 2024. While total refinance originations increased slightly, they are still down over 90% from their 2020 peak. Cash-out refinancing grew for the second consecutive year as homeowners accessed equity to manage costs or consolidate debt. Home improvement lending remained steady, reflecting continued investment in existing properties amid limited housing supply. These shifts in loan purposes show a market adapting to economic and policy changes, with affordability becoming the main factor affecting access.
The decline in mortgage lending to existing homeowners shifted the focus of the mortgage marketplace back to home purchase lending, revealing an interesting trend related to different groups of borrowers and the different census tracts where mortgage lending is occurring. Lenders reported originating approximately 5.3 million home loan records in 2024. Of these, about 4.7 million loans on owner-occupied, site-built, 1-4 unit homes included race and ethnicity data. The 2.6 million home purchase loans made in 2023 represent a small increase, indicating buyer activity has stabilized in the high interest rate environment. This purchase-dominated landscape directly connects to our previous analysis of how mortgage companies have specialized in home purchase lending (66.1% of all purchase loans), making them the primary gatekeepers for new homeownership opportunities.
The home purchase market is heavily dominated by mortgage companies and lenders that specialize in mortgage lending, both of which are exempt from Community Reinvestment Act (CRA) regulations. The CRA requires banks to invest in low- and moderate-income communities. However, as their share of home purchase lending wanes, so does the protection this critical law provides for home buyers.
Lending in majority-minority census tracts (MMCTs) remained relatively stable for home purchase loans in 2024. These areas received 26.7% of home purchase loans, down slightly from 26.9% in 2023.
The Census Bureau redrew neighborhood boundaries in 2020. This change took effect in 2022, which created about 30% more areas classified as “majority-minority.” This means we can’t easily compare today’s numbers to pre-pandemic levels, since many more neighborhoods now fall into this category than before.
This significant expansion of MMCT-designated areas means direct historical comparisons must be approached with caution as trends vary across different loan categories. MMCT lending for refinance loans increased to 20.7% in 2024, while cash-out refinancing held steady at 26.2%. MMCT lending for home improvement loans and home equity loans showed modest increases, reaching 18.8 and 20.0%, respectively.
However, lending patterns across racial and ethnic groups showed widening disparities. Hispanic borrowers expanded their presence in the home purchase market, accounting for 17.7% of home purchase loans with reported race and ethnicity data in 2024, up from 16.6% in 2023. This places Hispanic borrowers above their 16.8% share of the US adult population. Hispanic and Asian households are now the only minority groups consistently exceeding their population share in home lending, indicating increased market access while positioning them as a growing driver of future homeownership.
Black borrowers remain underrepresented in the home mortgage lending market. In 2024, they received 8.9% of home purchase loans, a slight increase from 8.7% from the previous year. However, this is still well below their 11.7% share of the adult population. This trend highlights a lack of progress in mortgage access for Black households, which is particularly concerning given the long-standing racial homeownership gap and housing’s role in building wealth. Part 1 highlighted how government-backed mortgages serve as the primary source of home purchasing capital for Black borrowers. Yet, as these programs lose market share to conventional loans, the disparities in access will persist.
Asian borrowers accounted for 9.4% of home purchase loans in 2024, continuing a pattern of exceeding their approximately 7% share of the U.S. adult population. However, Native American and Native Hawaiian/Pacific Islander borrowers remained underrepresented, each receiving less than 1% of home purchase loans.
Lender Type Service Patterns by Race and Geography
Examining lending patterns across institution types revealed significant variations in how different financial institutions serve various demographic groups. The data shows that mortgage companies, banks and credit unions each have distinct lending profiles when serving different communities.
Mortgage companies demonstrated the highest percentages of lending in MMCTs at 29.2%, substantially higher than banks (22.2%) and credit unions (16.9%). This pattern extended to non-White borrowers as well. Mortgage companies originated 20.4% of their home purchase loans to Hispanic borrowers compared to just 12.7% for banks and 12.5% for credit unions. Similarly, Black borrowers received 9.9% of mortgage company loans versus 7.3% from banks and 6.3% from credit unions.
When examining income-based lending, banks show slightly higher percentages of lending to low- and moderate-income (LMI) borrowers (15.6%), compared to credit unions (14.7%) and mortgage companies (14.0%). Additionally, mortgage companies are leading in lending to LMI census tracts (21.3%), suggesting they are more active in lower-income neighborhoods, but that they also may not be serving the lower-income residents within those areas as effectively.
A closer analysis of borrower income distribution across different neighborhood types reveals a troubling pattern: upper-income borrowers dominate mortgage lending in all census tract types, including in areas intended to serve lower-income households. In low-income census tracts, 28% of loans went to upper-income borrowers, while middle-income borrowers received 32%. Similarly, in moderate-income census tracts, upper-income borrowers accounted for 39% of loans, while middle-income borrowers received 35%.
The pattern persists when examining neighborhoods by racial composition. In neighborhoods where over 75% of residents are people of color, upper-income borrowers still account for 54% of all home purchase loans, though this is slightly lower than in predominantly White areas where upper-income borrowers received 61% of loans. Middle-income borrowers consistently received around 26-27% of loans across all neighborhood demographic categories.
Another concerning trend is the minimal lending to low-income borrowers across all neighborhood types. Even in areas with over a 75% majority-minority population, low-income borrowers received just 3% of home purchase loans, only slightly higher than the 2% seen in areas with lower minority concentrations. Moderate-income borrowers fare somewhat better in high-minority neighborhoods, receiving 16% of loans compared to 11% in predominantly white areas.
These data points highlight a critical dynamic where upper-income buyers are purchasing homes across all neighborhood types, while lower-income households continue to face significant barriers to mortgage access regardless of where they live. This suggests that while certain institutions may be more active in minority communities, the benefits primarily flow to higher-income households within these areas.
These disparities raise important questions about equitable access to mortgage credit. While mortgage companies demonstrate higher lending percentages in minority communities, their business models and government program utilization rates may influence these patterns more than regulatory compliance. Without consistent quality metrics across lender types, the long-term impacts of these lending patterns on community stability and wealth-building opportunities will remain unclear.
The data suggests that addressing the homeownership gap requires more than simply increasing lending activity in minority or low-income neighborhoods. It will require focused efforts towards expanding lending access specifically for lower-income households within all communities through targeted assistance programs and stronger regulatory frameworks across all lender types.
The lending distribution shows a market that is stabilizing in volume, but becoming less equitable overall. The increased representation of Hispanic and Asian households is positive, but the decreases in lending to low-income borrowers and the stagnation in lending to Black borrowers indicate that mortgage credit is becoming less accessible for those already facing significant barriers. While MMCT lending has been more resilient, particularly for cash-out refinance and home equity loans, this may reflect current activity among existing homeowners rather than improved access for new buyers. This dynamic is also substantially influenced by the 30% expansion of MMCT areas reflected in the 2020 census.
These actual underlying causes of the trends are made more complex by the growing number of loans without demographic data. In 2024, about 600,000 loan records did not include race or ethnicity information. These “No Data” loans are excluded from demographic calculations in this report, following NCRC’s methodology of not treating missing data as a racial category. The increasing share of “No Data” loans makes it harder to evaluate fairness in mortgage access and highlights the need for regulatory action to improve data quality and completeness.
Policy Solutions
1
Strengthen Fair Lending Enforcement
As non-bank mortgage companies continue to dominate the market, regulators must prioritize fair lending investigations across all lender types. The widening gaps in loan access suggest a need for more robust testing and supervision of lender practices, with a particular focus on government-backed loan programs for underserved borrowers.
2
Expand Down Payment Assistance Programs
The dramatic decline in lending to LMI borrowers indicates a critical need to expand targeted down payment assistance programs. This is especially important given that loan purpose distribution has shifted heavily toward purchases, multiplying the negative effects of affordability barriers. State and local governments should develop and strengthen assistance programs specifically for first-time buyers and traditionally underserved groups.
3
Improve HMDA Data Collection
The growing number of loans without demographic data threatens ongoing efforts to monitor fair lending trends. This data gap is particularly concerning given the market specialization trends when it comes to different institution types serving different market segments. Regulators should strengthen requirements for complete demographic reporting to ensure we can accurately track which populations each lender type is serving.
Resources
For the complete series, including videos, interactive visualizations and localized market analysis, visit our 2025 Mortgage Market series homepage . NCRC members can request customized community data requests as well. Those interested in membership benefits should contact Ralph Cyrus (Membership Engagement Specialist) at rcyrus@ncrc.org.
Mortgage Market Series
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