(Adds comments from the National Community Reinvestment Coalition’ chief program officer)
By Margaret Chadbourn
WASHINGTON, Sept 22 (Reuters) - Lending for U.S. home purchases fell 9 percent last year to a level that was 62 percent below the 2006 peak, U.S. financial regulators said on Thursday.
The data also highlighted a significant decline in refinancing activity despite the historically low interest rates that prevailed throughout the year.
Banks are required to disclose detailed lending data under the federal Home Mortgage Disclosure Act by March 1 of each year, and regulators regularly provide an overview.
“Mortgage originations declined between 2009 and 2010 in the HMDA data from just under 9 million loans to fewer than 8 million loans,” the report from the regulators said. “Most significant was the decline in the number of refinance loans.”
About 8.4 million applicants filed to refinance their loans in 2010, down from the 9.9 million loan applicants that were approved for refinancing in the year 2009.
An estimated 2.3 million home refinances that otherwise would have occurred did not go through last year because of home prices declines and tighter lending standards, the report showed.
The information collected by regulators is aimed at helping them determine how consumers are faring in credit markets, and whether any discriminatory lending patterns are emerging.
The 2010 data on home purchase showed that blacks and Hispanic whites had “notably higher gross denial rates than non-Hispanic whites, while the differences between Asians and non-Hispanic whites generally were fairly small by comparison,” the report said.
The same general pattern had been seen in prior years.
However, regulators cautioned that the data did not necessarily “show illegal discrimination.”
Higher denial rates could reflect variances in economic circumstances and credit-worthiness. Further investigation would be needed to determine if mortgage applicants were treated fairly.
“If you are white, affluent and have a pristine credit report, this report confirms that you can obtain a mortgage or refi your home,” said David Berenbaum, chief program officer of the National Community Reinvestment Coalition.
“However, if you are struggling to sustain your home, African American or Latino, the report confirms what many working families already know - that mortgage credit despite historic low rates is not readily available.”
The coalition promotes access to basic banking services, affordable housing and job development for working families.
The 2010 data consists of loan information reported by more than 7,900 lenders, including all of the nation’s largest mortgage originators.
Berenbaum said the HMDA data underscores that restrictive underwriting and ongoing fair lending issues are still barriers for would-be buyers, and that challenges persist in communities that have a high mortgage default rate.
The data collected through HMDA will be given to the newly installed Consumer Financial Protection Bureau for the first time for their review. (Reporting by Margaret Chadbourn; Editing by Kenneth Barry)