Hispanics are an increasingly significant segment of the homebuying population. According to projections from the Urban Institute, approximately 70% of new homeowners will be Hispanic by 2040.
However, the combination of rising interest rates and escalating home prices has exacerbated affordability issues for homebuyers, particularly among Hispanics, many of whom are young and first-time homebuyers.
Hispanic Homebuyers Are Younger than Their Non-Hispanic Counterparts
In general, Hispanic homebuyers tend to be younger than their non-Hispanic counterparts. In 2022, around 40% of Hispanic homebuyers were under the age of 35, compared with 36% of non-Hispanic homebuyers. Due to their younger age, these buyers are more likely to have limited savings and are often first-time homebuyers.
Majority-Hispanic Area Share Increased Slightly in 2023
CoreLogic compared the annual trends in the majority-Hispanic area’s share of all first-lien home purchase loan originations, using data from the Home Mortgage Disclosure Act (HMDA) and CoreLogic public records. In this case, a “majority-Hispanic area” is any census tract with a Hispanic or Latino population of at least 50% using the U.S. Census Bureau’s American Community Survey (ACS) data.
While HMDA data for 2023 is not yet available, CoreLogic observed a continued increase in home loans to majority-Hispanic areas, rising from 6.6% in 2022 to 6.8% in 2023.
Majority-Hispanic Areas Have Larger Share of Federal Housing Administration (FHA) Loans
Notably, FHA-insured loans tend to have a higher share of low-income and high-minority census tract lending than do conventional loans, including majority-Hispanic areas. Both the share of FHA loans and conventional loans in these areas saw slight increases in 2023.
Denial Rates Are Higher for Hispanic Borrowers and Borrowers in Majority-Hispanic Areas
Despite a slight overall increase in the denial rate for home purchase mortgage lending in 2022, the denial rate is higher for both Hispanic borrowers and borrowers in majority-Hispanic areas compared with their non-Hispanic counterparts.
In 2022, the overall denial rate for home-purchase loans among Hispanic borrowers stood at 13%, whereas it was only 9% for non-Hispanic borrowers. According to HMDA data, the debt-to-income ratio is the primary reason for denied mortgage applications across all borrowers, and it is 3 percentage points higher for Hispanic borrowers compared with their non-Hispanic counterparts.
Young Hispanic households will account for the largest household growth
In 1990, just 7.3% of young households (headed by someone younger than 65) were Hispanic, according to the Urban Institute. By 2020, that had more than doubled to 16.4%. It's projected that this share will continue to increase in the next two decades, and that by 2040, more than 20% of young households will be Hispanic—triple the share in 1990.
The Hispanic household share will likely explode because the Hispanic population today is much younger than other racial and ethnic groups—meaning they are aging into the prime years for household formation.
The Hispanic population is the only racial or ethnic group that will experience an increased homeownership rate
The Urban Institute projects that, with no change in policies, the overall homeownership rate will drop from 65% to 62% between 2020 and 2040, with the non-Hispanic white homeownership rate dropping from 73% to 71%, the Black homeownership rate dropping from 42% to 41%, and the homeownership rate for “other” households dropping from 58% to 57%.
To read the full CoreLogic report, including more data, charts, and methodology, click here.