Zillow's Skylar Olsen looks through Home Mortgage Disclosure Act (HMDA) data that shows the denial rates for mortgage applications dropped significantly last year, from 13.6% to 12.4%, a drop that's particularly acute among minority borrowers.
The denial rate on FHA loans didn't fall quite as much, down 80 basis points to 16.6%, but on conventional mortgage applications, denials dropped down to 11.2%, from 12.4% in 2014. For Hispanic and black borrowers, denial rates were down 3.1% and 5.1% respectively, compared to 1% and 1.1% for white and Asian applicants.
Fewer mortgage denials are probably the byproduct of mortgage underwriting standards that have steadily gotten progressively easier in recent years ...
For example, those with lower credit scores made up a larger share of those approved for a Fannie Mae-backed loan in 2014 compared to 2013. The 10th percentile credit score (the maximum credit score of the lowest 10 percent of all approved applications) for Fannie-approved loans in July 2013 was 694. By July 2014, this cutoff had dropped to just below 680.