32% of Native American mortgage applications were denied in Arizona

About a third of Indigenous Arizonans who applied for a mortgage last year were denied — nearly four times the denial rate for white Arizonans, according to a Zillow analysis of federal data.

Why it matters: Policy experts tell us long-standing financial barriers coupled with high interest rates and inflation are boxing out would-be buyers of color from one of the most important American wealth-building tools: homeownership .

By the numbers: About 32% of Native American mortgage applications in Arizona were denied in 2023, compared with about 16% of Black or Latino applicants and 8% of white applicants, per Zillow's analysis.

Zoom out: This mirrors a national trend of higher denial rates among applicants who are Black, Indigenous and other people of color, Zillow senior economist Orphe Divounguy tells Axios.

Between the lines: A lack of credit history was the No. 1 reason Native American applicants in Arizona were denied, according to the analysis.

• Mortgage lenders want to see a history of on-time payments toward auto loans, credit cards or other loans to establish whether a borrower is reliable.
• Indigenous Arizonans, especially those who live on reservations, typically have less access to banks and other financial services that can help build credit, Divounguy says.

Meanwhile, a high debt-to-income ratio was the most common reason other Arizona applicants were denied.

• Credit card and auto loan delinquency is trending upward, showing that inflation and high interest rates are putting added pressure on middle-class families, Divounguy says.

Reality check: Urban Institute senior fellow Michael Neal says many of these denials are the byproduct of structural racism and discrimination that has resulted in some minority groups not having the income or assets needed to qualify for a loan.

• "A whole community is being excluded from that part of the financial system," he said.

Stunning stat: The value of the typical Arizona home owned by a Native American is about 20% lower than the average home, per Zillow's analysis.

• Arizonans of color who are able to purchase a home are still less likely to build as much equity as white homeowners because the neighborhoods where they live typically see less public and private investment and fewer amenities, Divounguy said.

The bottom line: "Even if you manage to get on the homeownership ladder these disparities tend to exist," Divounguy says.