Home Loan Originations

Home Loan Originations measures the number of home improvement and home purchase loans per capita, disaggregated by race of the applicant, in the St. Louis region. According to the Consumer Financial Protection Bureau, there were over 61,000 originated home loans originated in the region in 2016, which represents just over 31 home loans per 1,000 people.

Home Loan Originations Indicator Scores

City of
St. Louis

9

St. Louis
County

33

St. Charles
County

62

St. Clair
County

34

What does this score mean?

A score of 100 represents racial equity, meaning there are no racial disparities in the outcomes between black and white populations. The lower the Equity Score, the greater the disparity.

For Home Loan Originations, a score of 100 – a score reflecting racial equity – would mean home loans are equally likely to be originated in majority-black and majority-white neighborhoods. It is important to note that for this indicator, equity is not our only goal; we also want to improve outcomes for all.

WHAT DOES THIS ANALYSIS MEAN?

There are nearly four times as many home loan originations per capita for white residents as there are for black residents in the region. Particularly in the City of St. Louis, white residents are over eight times as likely to be issued a home loan (27.9 originations per 1,000 residents) than black residents (3.6 per 1,000). In St. Louis and St. Clair Counties, white residents are about three times more likely to be issued home loans (in St. Louis County, about 35 white residents per 1,000 are issued a loan, while 11.5 black residents per 1,000 are, and in St. Clair County, about 28.99 white residents per 1,000 are issued a loan, while about 9.9 black residents per 1,000 receive a loan). In St. Charles County, white residents (44.5 loans issued per 1,000 residents) are more likely than black residents to be issued home loans (30.4 originations issued per 1,000 residents).

If the rate at which loan originations occurred was more equitable, the number of black applicants receiving a loan would increase by:

3,492 in the City of St. Louis,
745 in St. Charles County,
2,292 in St. Clair County, and
8,337 in St. Louis County.

Why Do Home Loan Originations Matter?

Home loan originations represent private investment in the housing stock. Home loans issued by financial institutions allow people to purchase and improve their homes. When home loans are not issued in a certain neighborhood as a rule, this is a practice known as redlining. Redlining is illegal today, but its legacy still affects the neighborhoods where it was once legally practiced, as redlining creates a cycle of disinvestment from which it is hard to recover. A history of home loan denials in a neighborhood leads to concentrated disinvestment in properties and prevents homebuyers from being able to move into a neighborhood because they can’t get a loan. And of course, when a neighborhood looks run down, that discourages people from wanting to move into that neighborhood or to purchase property there. This leads to vacancy, which provides further discouragement to potential residents.

Which Calls to Action from the Ferguson Commission’s report are linked with this indicator?

The Ferguson Commission prioritizes optimizing existing housing supports. The related calls to action specific to increasing home loan originations include:

Identify Financial Empowerment Centers throughout the St. Louis region to concentrate financial services that provide community development banking and multigenerational financial education.
Teach Financial Literacy to Section 8 Housing Beneficiaries
Strengthen the Community Reinvestment Act to help financial institutions meet the credit needs of their community, including vigorously enforcing Equal Credit Opportunity Act (ECOA) and fair housing laws in instances where lending discrimination is believed to exist.

Questions for Further Investigation:

Why is there a racial disparity in Home Loan Originations?
What can St. Louis do to reduce racial disparities in Home Loan Originations?
What initiatives are currently underway to reduce racial disparities in Home Loan Originations?

How can I learn more about this issue?

The City of St. Louis Planning Department publishes an annual report on the residential lending activities of the banks that have applied to be City of St. Louis Depositors.

On a more national basis, you can learn more about racial disparities in lending from a series of articles from The Center for Investigative Reporting.

Home Loan Originations Data

Home loan originations per 1,000 people

	All	Majority-White	Majority-Black	Disparity Ratio	Equity Score
Home Loan Originations	5,143	4,188	446
Population	316,030	149,929	125,018
Home Loan Originations per 1,000 people	16.3	27.9	3.6	7.830 to 1	9

Data Source: Home Mortgage Disclosure Act, 2016; American Community Survey 5-year estimates, 2012-2016

Home loan originations per 1,000 people

	All	White	Black	Disparity Ratio	Equity Score
Home Loan Originations	31,991	24,482	2,720
Population	1,000,560	692,735	235,920
Home Loan Originations per 1,000 People	31.973	35.341	11.529	3.065	33

Data Source: Home Mortgage Disclosure Act, 2016; American Community Survey 5-year estimates, 2012-2016

Home loan originations per 1,000 people

	All	White	Black	Disparity Ratio	Equity Score
Home Loan Originations	17,556	15,269	510
Population	379,856	343,464	16,761
Home Loan Originations per 1,000 People	46.20	44.50	30.40	1.464	62

Data Source: Home Mortgage Disclosure Act, 2016; American Community Survey 5-year estimates, 2012-2016

Home loan originations per 1,000 people

	All	White	Black	Disparity Ratio	Equity Score
Home Loan Originations	6,523	4,978	788
Population	265,569	172,396	79,402
Home Loan Originations per 1,000 People	24.562	28.875	9.924	2.910	34

Data Source: Home Mortgage Disclosure Act, 2016; American Community Survey 5-year estimates, 2012-2016

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