Post-Pandemic Mortgage Market Plummets in Chicagoland, Hitting Black and Latine Homebuyers

For Immediate Release:
July 2, 2025 

Contact:
Robert Mayo | hello@woodstockisnt.org 

As interest rates continue to rise, new lending data reveals a sharp decrease in lending activity and higher loan costs are putting homeownership further out of reach. 

CHICAGO – Lending approval rates plummeted across the Chicago region between 2021 and 2023, as the area’s lending market collapsed in the wake of the pandemic and rising interest rates. New data shows home purchase, refinance, and other mortgage lending applications dropped by a staggering 62 percent, while actual loan originations fell 68 percent—amounting to nearly 358,000 fewer applications and 255,000 fewer approvals. The decline cut across all racial groups but had significant implications for communities already facing barriers to homeownership. 

 2023 Lending Observations, a new analysis from Woodstock Institute, a research and advocacy organization focused on financial systems reform, tracks shifts in home purchase, refinance, and other mortgage lending applications, originations, denials, and loan costs with a focus on racial disparities in lending from 2021 to 2023. Due to historically low interest rates, refinancing accounted for most of this lending activity during this time. This research brief analyzes the most up-to-date lending data available covering the seven-county Chicago region, Cook County, and the City of Chicago.  

 Key findings include: 

• Mortgage approval rates in the seven-county region declined across all racial groups between 2021 and 2023. For White applicants, approval rates declined from 72 percent to 62 percent. Approval rates for Black applicants declined from 51 percent to 44 percent, and Latine borrowers’ approval rate fell from 61 percent to 54 percent.  

• In 2023, in the seven-county region, Black and Latine applicants continued to see significantly higher denial rates compared to White applicants at 28 percent and 23 percent, respectively. Ultimately, 1 out of every 4 mortgage applications from Black or Latine borrowers in the seven-county Chicago region were declined in 2023.
  

• These racial disparities persisted even when zeroing in solely on “well-qualified” applicants by controlling debt-to-income (DTI) ratio and loan-to-value (LTV). In the seven-county region and Cook County in 2023, well-qualified Black borrowers (borrowers with a DTI ratio of less than or equal to 43 percent and a LTV less than or equal to 80 percent) were 3.1 times more likely, and well-qualified Latine borrowers were 2.3 times more likely, to be denied a loan than similarly situated White borrowers.  

• High-cost loans surged across all racial groups and income levels between 2021 and 2023, placing disproportionate burdens on borrowers of color. Latine and Black borrowers in Chicago spent nearly six percent of their annual income on upfront fees to obtain a mortgage compared to only 3.8 percent for White borrowers.  

“Prospective Black and Latine homeowners, including those who are well-qualified, are much more likely to be denied a home purchase or refinancing loan than White applicants. Even when approved, lower incomes, higher relative loan costs, and slower appreciation rates of homes in historically redlined communities continue to create barriers to wealth accumulation in those communities,” said Serrater Chapman, Director of Applied Research at Woodstock Institute.  “This is especially startling when taking into account analysis that shows the Black-White homeownership gap is larger today than in 1960.” 

This analysis is primarily derived from yearly lending data made available by the Home Mortgage Disclosure Act (1975). Detailed mortgage and small business lending data for all of Illinois, including at the municipal, county, and Chicago neighborhood level, is available for free on Woodstock Institute’s Community Lending Data Portal. 

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