Loan Denial Rate
The share of home-purchase mortgage applications that lenders denied.
The share of home-purchase mortgage applications on properties in a tract that ended in a denial.
Lenders report an outcome for every application they act on. The Home Mortgage Disclosure Act register records "the action taken on the covered loan or application," with denial one of eight defined outcomes alongside origination, withdrawal by the applicant, closure for incompleteness, and approval that the applicant did not accept (FFIEC LAR data fields). Applications counted here are those the register classifies as a home purchase, which Regulation C separates from home improvement, refinancing and cash-out refinancing (12 CFR 1003.4).
A denial rate describes the outcome of applications that were actually filed. It is not a measure of how many people could not obtain a mortgage, since people who expect to be turned down often do not apply, and those applications never enter the record.
Metrics in this family#
Loan denial rate
levelDenied home-purchase applications as a share of home-purchase applications on properties in the tract.
Applications withdrawn by the applicant and files closed for incompleteness are counted as applications but not as denials, so they lower the rate. Loans a lender bought from another institution are not applications at all and are excluded from both sides.
Considerations#
The rate is reported over a window of up to three years ending in the most recent published activity year, so it reflects recent lending conditions rather than a single year. Interest rates, credit standards and application mix all moved sharply across recent years, and a multi-year reading blends them.
Denial rates are sensitive to who applies. A tract where applicants are on average further from qualifying will show a higher rate without any difference in how lenders treat comparable applicants. The public register omits the fields that would allow a like-for-like comparison: credit scores, automated underwriting results, and the reasons for denial are among the 27 fields redacted for privacy (Using MLAR Data). Nothing here should be read as evidence about a particular lender's conduct.
The tract is the tract of the property, not of the applicant. In tracts with few applications the rate rests on a small number of decisions and moves substantially with one or two of them.
Coverage follows institutions above the Home Mortgage Disclosure Act's reporting thresholds rather than every lender, so lending by very small institutions is missing. The published file is also revised as institutions resubmit. See the source page for both.
References#
- 1FFIEC LAR data fieldshttps://ffiec.cfpb.gov/documentation/publications/loan-level-datasets/lar-data-fields
- 212 CFR 1003.4https://www.consumerfinance.gov/rules-policy/regulations/1003/4/
- 3Using MLAR Datahttps://ffiec.cfpb.gov/documentation/publications/modified-lar/resources/using-mlar-data