February 1999
Federal Reserve Bank of Dallas

Supplement

1997 Eleventh District HMDA Profile

The Federal Financial Institutions Examination Council (FFIEC) has released 1997 home mortgage loan data gathered under the Home Mortgage Disclosure Act (HMDA). The national data, released in August 1998, reflect lending activity for nearly 8,000 institutions covered by the act. This profile reports HMDA data describing lending patterns for the United States and 10 geographically diverse metropolitan statistical areas (MSAs) in the Eleventh Federal Reserve District, which includes Texas, southern New Mexico and northern Louisiana.

Home Purchase Loans
Figures 1 through 3 show the percentage changes in home purchase loan originations (conventional plus government-insured) from 1996 to 1997 by racial/ethnic group and income level nationally and in the 10 Eleventh District MSAs studied. Because of the smaller population and number of loan originations in the four smaller MSAs—Brownsville, Laredo, Las Cruces and Shreveport—only the percentage changes for the two largest ethnic groups are given. Table 1 contains the complete HMDA data reflected in the figures.

National Lending Patterns
Nationally, as shown in Figure 1A, home purchase loans increased by 12.2 percent for Asians, 3.9 percent for Blacks, 3.8 percent for Hispanics and 2.0 percent for Whites. Loans made to American Indians, however, decreased by 1.2 percent during this period. The average increase was 2.6 percent.

Other lending patterns emerged when income level was added to the equation. As shown in Figure 1B, from 1996 to 1997 home purchase lending to low- or moderate-income borrowers increased by 5 percent and to middle-income borrowers by less than 1 percent. Upper-income borrowers experienced a 3.3-percent increase.

Additionally, lending to low- or moderate-income Black, Hispanic and White borrowers increased at a faster rate than that to their middle- and upper-income counterparts across the United States. Loans to middle-income Blacks and Hispanics increased by 2.1 percent and 0.8 percent, respectively, with loans to middle-income Whites increasing by only 0.1 percent. The national data show that upper-income Black borrowers realized a decline of 1.2 percent in loans received. Lending increased by over 3 percent for both upper-income Whites and Hispanics.

Racial/Ethnic Lending Patterns in 10 MSAs Studied
Lending patterns varied within all of the MSAs and from the national numbers, as seen in Figure 2. Among the six larger MSAs, total loan originations increased in the Dallas, Houston and San Antonio MSAs from 1996 to 1997. Total originations, however, decreased in the Austin, Fort Worth and El Paso MSAs, with Austin experiencing a decline in lending to every racial and ethnic group. The overall decline in originations in these three MSAs reflects weakness in their local economies caused by specific problems in the semiconductor electronics industries and the Mexican economy. Similar weakness was seen in single-family housing permit data for these same MSAs.

The Houston MSA experienced a 7.2-percent increase in loans originated to Black borrowers. However, the number of loans to Blacks decreased in the other five large MSAs from 1996 to 1997. The Austin and Fort Worth MSAs experienced the largest percentage declines, 10.5 and 11.2, respectively.

Loans to Hispanic borrowers increased in the Fort Worth, Houston, San Antonio and El Paso MSAs, yet only Fort Worth and San Antonio experienced an increase greater than the national rate of 3.8 percent. The Dallas MSA saw a decline of 3.6 percent in loans to Hispanics.

Three of the six large MSAs had an increase in lending to White borrowers, with Houston having the largest increase, 8.9 percent. Loans originated to White borrowers decreased in the Austin and El Paso markets by 5.2 percent and 17.2 percent, respectively.

Loans to American Indian and Asian borrowers showed significant percentage swings in five of the large MSAs, although the actual number of loan applications received was limited. It should be noted, however, that in all six of the large MSAs loans to American Indians dropped at a higher rate than the national number, which also reflected a decrease. Lending to Asian borrowers increased in three of the large MSAs, including Dallas and Houston, which realized 16-percent and 13.1-percent increases, respectively. Lending to Asians decreased in the Austin MSA by 18.2 percent.

Among the four smaller MSAs, Brownsville realized a total increase in mortgage loans of 16 percent, well above the national increase of 2.6 percent. Loans to Hispanic borrowers in Brownsville increased by 12.7 percent and to White borrowers by 22.8 percent. In contrast, the Shreveport MSA realized a 15.3-percent decrease in mortgage loans. Loans to White borrowers decreased by 16.7 percent and to Black borrowers by 8.4 percent. Loans to Hispanic borrowers increased by 12.1 percent in the Las Cruces MSA; however, they decreased by 5.3 percent in the Laredo MSA.

Lending Patterns in 10 MSAs by Racial/Ethnic Group and Income
In the Eleventh District, as seen in Figure 3, lending to low- or moderate-income borrowers increased in all six of the larger MSAs, with four experiencing sizable percentage increases: 7.3 in Austin, 8.2 in Fort Worth, 21 in San Antonio and 12.2 in Houston.

Lending to middle-income borrowers increased in the Dallas and El Paso MSAs, and lending to upper-income borrowers increased in the Dallas, Houston and San Antonio MSAs. Lending to upper-income borrowers decreased in the El Paso and Austin MSAs by 19.3 percent and 9.9 percent, respectively.

During 1997, lending to low- or moderate-income Black borrowers increased in the Houston and San Antonio MSAs by 21.6 percent and 21.2 percent, respectively—well beyond the 9 percent increase nationally. However, lending to middle-income Black borrowers declined in five of the six large MSAs studied, including percentage decreases of 15.9 in Austin, 16 in Fort Worth, 15.1 in San Antonio, 6.5 in Houston and 4.7 in Dallas. Loan originations to high-income Blacks declined nationally and in four of the District's larger MSAs.

Hispanics in the low- or moderate-income category experienced increased lending in five of the large MSAs. The San Antonio and El Paso MSAs had an almost 18-percent increase—large compared with the 7.6-percent increase nationally. However, lending to low- or moderate-income Hispanics declined by 6.5 percent in Dallas.

Lending to middle-income Hispanic borrowers increased in three of the larger MSAs, but declined in Austin by 13.1 percent and Houston by 6.7 percent; it remained constant in Dallas. Loan originations to upper-income Hispanics increased in Dallas, Fort Worth and Houston.

Lending to low- or moderate-income White borrowers increased in all six of the larger MSAs, with San Antonio experiencing a 23.5-percent increase, Houston a 15.9-percent increase and El Paso a 44.3-percent increase. Lending to middle-income White borrowers did not change significantly between 1996 and 1997 except in the Austin MSA, where it declined 7.1 percent, and the San Antonio MSA, where it declined 8 percent. A decline in lending to upper-income Whites occurred in Austin, Fort Worth and El Paso.

Among the smaller MSAs studied, lending to low- or moderate-income borrowers increased in the Brownsville and Laredo MSAs by 16.9 percent and 19.2 percent, respectively, and by 2.2 percent in Las Cruces. Shreveport realized a 6.4-percent decrease in lending to low- or moderate-income borrowers.

Home Purchase Loan Application Denials
Figure 4 shows the home purchase loan applications received in 1997 and the loan denial rates by race/ethnicity and income for the 10 Eleventh District MSAs studied. Again, because of the smaller population and number of loan applications in the four smaller MSAs, only the percentage changes for the two largest ethnic groups are given. Table 2 contains the complete HMDA data reflected in the figures.

As seen in Figure 4, the denial rate for low- or moderate-income applicants in all MSAs was higher than that of middle- and upper-income applicants for all racial and ethnic groups. The data show that for most of these MSAs as income increases, the denial rate declines for all racial and ethnic groups.

The differences in denial rates between White and Black applicants ranged from 22.2 percent in Austin to 3.5 percent in Fort Worth. The differences in denial rates between White and Hispanic applicants ranged from 28.2 percent in Austin to 2.6 percent in Fort Worth. Denial rates for Asian applicants are lower than those for White applicants in all cities except El Paso.

About Banking and Community Perspectives Supplement Perspectives Federal Reserve Bank of Dallas Community Affairs Office P.O. Box 655906 Dallas, Texas 75265-5906 The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Community Affairs Office.