WASHINGTON, D.C. — The Federal Financial Institutions Examination Council (FFIEC) has released detailed data on mortgage lending transactions for 2023, offering a comprehensive overview of the U.S. mortgage market. This data, reported under the Home Mortgage Disclosure Act (HMDA), comes from 5,113 financial institutions, including banks, savings associations, credit unions, and mortgage companies.
Key Findings in the 2023 Mortgage Landscape
The newly released data provides crucial insights into the state of mortgage lending. Notably, the number of reporting institutions increased by 14.6 percent, from 4,460 in 2022 to 5,113 in 2023. Despite this increase, the total number of home loan applications dropped to 10 million, down from 14.3 million in the previous year. Of these, 7.7 million were closed-end loans, such as traditional mortgages, while 2.1 million were open-end loans, like home equity lines of credit.
Rising Influence of Non-Depository Mortgage Companies
One significant trend highlighted by the data is the growing influence of non-depository, independent mortgage companies. These entities accounted for 68.8 percent of first lien, one- to four-family, site-built, owner-occupied home-purchase loans in 2023, up from 60.2 percent in 2022. This shift underscores the increasing role these companies play in the housing finance market.
Racial and Ethnic Disparities in Mortgage Approvals
The data also sheds light on racial and ethnic disparities in mortgage approvals. The share of closed-end home purchase loans to Black or African American borrowers rose slightly from 8.1 percent in 2022 to 8.2 percent in 2023. Loans to Hispanic-White borrowers increased from 9.1 percent to 9.9 percent, and those to Asian borrowers grew marginally from 7.6 percent to 7.7 percent.
However, denial rates reveal persistent inequalities. Black or African American applicants faced a denial rate of 16.6 percent for conventional, closed-end home purchase loans. Hispanic-White applicants experienced a 12.0 percent denial rate. In comparison, Asian applicants had a 9.0 percent denial rate, while non-Hispanic-White applicants were denied at a rate of 5.8 percent.
Importance and Implications of the HMDA Data
The HMDA data plays a vital role in various sectors. Industry professionals, consumer groups, and regulators use this information to assess fair lending practices and identify potential risks. For the general public, the data helps evaluate how well financial institutions are meeting the housing needs of their communities. Additionally, federal financial regulators use this information in fair lending and Community Reinvestment Act examinations.
The FFIEC’s dataset not only provides historical context but also includes tools for real-time analysis. The Dynamic National Loan-Level Dataset is updated weekly, while the Aggregate and Disclosure Reports offer summary information for specific institutions and regions. The HMDA Data Browser allows users to create custom tables, interactive maps, and download datasets for further analysis.
Protecting Privacy and Enhancing Transparency
To balance transparency and privacy, the FFIEC has made Modified Loan/Application Registers available since mid-March 2024. These registers provide loan-level data while protecting applicant and borrower privacy. A combined file for all filers is also available, ensuring comprehensive access to the data.
Looking Ahead
The release of the 2023 HMDA data by the FFIEC is a critical step in understanding and addressing the complexities of the U.S. mortgage market. By offering detailed insights and facilitating extensive analysis, this data helps drive informed decision-making and fosters a more equitable housing finance system.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.