A new report released today by the Federal Financial Institutions Examination Council found that mortgage lending slumped in 2007 as high-risk loan programs were phased out.
The group, which includes a number of agencies such as the FDIC, OCC, and OTS, utilized HMDA data from 8,610 financial institutions to analyze home lending statistics and promote fair lending.
Per the report, mortgage applications fell 22 percent from 2006 to 21.4 million, while loan originations slid 25 percent to 10.4 million.
Mortgages extended to minorities fell disproportionately, with home purchase loans to Hispanics down 49 percent and African-Americans down 35 percent.
Conversely, home purchase loans to white borrowers fell just 22 percent, and even less so to Asian borrowers.
While it’s clearly troubling that certain racial groups saw lending volume decline disproportionately, tighter underwriting guidelines and larger down payment requirements should improve conditions going forward.
Meaningful changes, not lower mortgage rates, are the answer if we want to break out of this cycle.