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Mortgage interest rates have fallen to their lowest levels on record during the COVID-19 pandemic, spurring home purchases, but the halt in black homeownership during the COVID-19 has been unquestionable.
Despite record-low mortgage interest rates, which fueled home purchases, Black Americans lost ground in homeownership, with the gap between black and white owners widening.
As much as Black people lost disproportionately more health and jobs as a result of the epidemic, they also lost progress in terms of homeownership. The wealth gap between black and white owners grew, widening a separation that now sees the average white family owning eight times as much as the average black family.
According to a Center for American Progress analysis of Census Bureau statistics, the Black homeownership rate was 44.1 percent at the end of 2020, nearly identical to the 44 percent who owned homes during the same period in 2019. White Americans’ homeownership rate increased to 74.5 percent from 73.7 percent.
According to the Federal Reserve Bank of St. Louis, the Black homeownership rate was on the rise at the start of the decade, climbing to 47 percent in the second quarter of 2020, up from 40.6 percent a year earlier.
The Mortgage Bankers Association confirms that the average 30-year-fixed mortgage rate was 3.07 percent for much of the pandemic. According to home-finance company Freddie Mac, mortgage rates plummeted to historic lows more than a dozen times in 2020, with the average rate dipping to 2.65 percent in January, the lowest on record.
However, a number of variables made it more difficult for Black buyers to benefit from decreasing borrowing costs.
White people were more likely to be able to work from home, allowing them to move to areas where they could purchase a home more readily, and were more heavily invested in a surging stock market.
Systemic imbalances and open bigotry have long made it difficult for Black Americans to own or cling onto property. For decades, redlining made it impossible for Black people to obtain mortgages. When expressway building split Black communities, restrictive covenants made it impossible for Black residents to buy homes in white neighborhoods, and Black property owners were frequently dispossessed.
Predatory loans disproportionately targeted black individuals, contributing to the housing meltdown and recession of 2008. Many people’s credit was damaged when they couldn’t make payments with high-interest rates or lost properties that were worth less than they paid for them.
Black homebuyers frequently work extra hours to amass money for a down payment. According to a Redfin survey, 30 percent of Black respondents sought a second job in order to finance their first home, compared to 22 percent of white respondents.
Borrowers with large debt or modest down payments may be turned down for the lowest-cost loan, even when interest rates are low.
This is all very disheartening information in this day and age. Changes must be made to rectify this extreme disproportion of statistics for Black Americans.