And stark disparities remained.
Few of those mortgages to Black and Latino buyers were used to purchase homes in wealthier suburbs of Boston, and instead went toward properties in cities such as Lawrence and Brockton, where there are already sizeable Black and Latino populations. And in Boston, racial disparities in mortgage lending were dramatic from neighborhood to neighborhood.
“The fact that we’re finally having some consistency in the proportion of mortgages going to Black and Latino buyers represents true progress,” said Tom Callahan, executive director of the partnership, a banking group that advocates for policy to end the racial wealth gap. “It is really heartening to see, but it does not mean we are anywhere close to closing this enormous racial homeownership gap. There is still a long way to go.”
Home buying dipped across all demographics in 2022 as interest rates shot up and home prices remained high. The average on a 30-year fixed-rate mortgage more than doubled in the span of less than a year, from around three percent to well over six percent, effectively doubling monthly housing costs for new buyers and pushing many people out of the market.
Some economists and advocates had warned that Black and Latino residents, in particular, would lose ground as costs increased. That both groups were able to secure mortgages despite higher costs is a sign that new policies and programs seeking to boost homeownership opportunities — including new funds like the MassDREAMS program that cover down payment costs and others that buy down mortgage rates — have worked to some degree, said Callahan.
“Many lenders reported to us informally that they saw the numbers of loans to Black and Latino buyers actually increase despite the high interest rates,” said Callahan. “That is a huge policy success story. These programs made some deals work that wouldn’t have otherwise worked.”
But the geographic disparities remain vast.
Black and Latino buyers accounted for 41 percent of mortgages in the state’s so-called Gateway Cities — 26 cities across Massachusetts with generally lower incomes and older housing stock — but just 19 percent of mortgages elsewhere.
And in Boston, with its 20th-century legacy of “redlining” when banks wouldn’t lend in neighborhoods with large minority populations, those disparities were particularly dramatic.
Black residents accounted for 21 percent of the city’s population in 2022, but only 8 percent of new mortgages. No Black borrowers received mortgages in Back Bay, Beacon Hill, or Fenway, the report found, and they made up less than 1 percent in downtown and South Boston. Only in Mattapan and Hyde Park did more than a third of the total mortgages issued go to Black buyers.
The same was true for Latino borrowers. No mortgages were issued to Latino buyers in Fenway and Mission Hill. Even in majority-Latino East Boston, only 12 percent of traditional home loans went to Latino borrowers.
The lending statistics, said Callahan, are a reminder that Boston’s racial homeownership gap is still deep and has, by some measures, worsened as home prices have surged in recent years.
Other disparities lingered, too. The share of well-qualified applicants — people who apply for mortgages and meet certain underwriting criteria for financial good standing — who were denied loans was twice as high for Black people as it was for white buyers, the report found, a lingering symptom of discrimination in lending.
The report contends that the path to closing the homeownership gap is still daunting, but it pointed to recent policies that might help, including efforts to build more and enforce fair housing rules. Funding poured into homeownership programs during the COVID-19 pandemic, which helped thousands of low- and middle-income households buy homes. But that money is running out, and there’s relatively little money in the multibillion-dollar housing bond bill now moving through the Legislature to support homeownership programs.
“The overall amount of funding for homeownership [in the bill] is a tiny percentage of the total authorization amounts and represents a cut from the Covid-era supports that boosted homeownership for households of color from 2021-2023,” the report said. “More funding is necessary if we are going to sustain that progress. And right now, policy makers in Massachusetts are not prioritizing affordable homeownership opportunities in a way that will close the gap.”
Andrew Brinker can be reached at andrew.brinker@globe.com. Follow him @andrewnbrinker.
