The mortgage app gap, explained

Nearly 17% of U.S. Black mortgage applicants were denied in 2022, compared to 6.7% of white applicants in that same period, per the most recent data from the Consumer Financial Protection Bureau.

• These figures have remained relatively steady over the last five years, per CFPB data.

Why it matters: Homeownership is key to generational wealth in the U.S. Home equity can be tapped for things like college tuition, paying off burdensome credit card debt or helping your kid with a down payment.

What's happening: High debt-to-income ratios and poor or nonexistent credit history are the largest reasons Black mortgage applicants are denied at a higher rate than other racial groups in the U.S., Urban Institute researcher Jung Choi tells Axios.

• Many households of color, especially Latino and Black households, are "struggling to make ends meet," Choi says.
• Higher amounts of debt and delinquent payments are tanking credit scores and driving up that debt-to-income ratio, she explains.
• Compared to other groups, Black folks are most likely to be unbanked, largely due to a lack of trust — spurred by predatory lending and discriminatory banking practices.

The intrigue: High mortgage rates are making the problem worse. When mortgage rates are higher, it increases the amount you're spending on debt each month, Choi says.

• The more debt you have, relative to your income, the less likely you are to be approved for a mortgage.

The big picture: Although racial discrimination in the sale, rental and financing of housing was outlawed in 1968, racism is still deeply embedded in every part of the buying process.

• For example, up until 2021, lenders were required to assume those with student loans were paying 1% of the total balance every month, even if they were on a lowered, income-based repayment plan, HUD chief of staff Julienne Joseph tells Axios.
• It inflated debt-to-income ratios, even when that wasn't the reality of what the borrower was paying, Joseph says.