Black applicants are more likely to be denied home improvement loans, yet white applicants are more likely to apply in Black and low-income neighbourhoods. Loan denial is associated with less that seven hours sleep.

For the attention of: Urban residents, planners, and leaders interested in racial justice in housing.

The problem: The existence of discrimination in mortgage loans is well documented, dating back to the Home Owners’ Loan Corporation (HOLC) “redlining” maps which denied access to mortgages in Black areas deigned “high risk.” While there is evidence of such practices today, few studies have examined discrimination in other aspects of home ownership, specifically home improvement loans. Being able to afford to repair and upgrade ones’ home has impacts on the community itself as well as the mental well-being of residents.

What we did and why: We used publicly available data on home improvement loans first because this has not been done before. We examined the race of applicants, their likelihood of being denied the loan, and the demographic characteristics of the census tract where the property in question was located. We next looked at self-reported mental health and sleep duration of residents in that census tract.

What our study adds: We found that white applicants were less likely to be denied that Black applicants, and that these applications were greatest in neighbourhoods that were lower income and predominately Black. In addition to examining institutional racism in an important aspect of the home ownership continuum, these results may also suggest home improvement loan applications as a precursor to neighbourhood change

Implications for city policy and practice: Understanding discrimination in home improvement loan application and denial rates is of public health and urban planning importance. Access to financial support outside of formal banking could be helpful in revitalizing lower income and predominantly Black neighbourhoods.

Full research article: Examining Discrimination in Home Improvement Financing (Home Mortgage Disclosure Act 2012 – 2016) and Neighborhood Health in the United States by Brigette Davis, Mariana Arcaya, David Williams, Molly Metzger, and Nancy Krieger