A look at mortgage applicants with the highest and lowest incomes in 2015 reveals major differences between the two cohorts, as well as the occasional similarity.
Both groups were similar, for instance, in loan purpose, with each cohort fairly split between home purchase and refinancing business. Upper income borrowers applied for 45 percent purchase and 48 percent refis, while for lower income the splits were 44 percent purchase and 43 percent refi (lower income borrowers applied for more home improvement loans than upper income).
And, white borrowers predominated for both categories, at 68 percent for upper income and 60 percent for lower income.
But in most categories, there were wide differences between the two, according to the LendingPatterns™ database of Home Mortgage Disclosure Act data for 2015.
Origination rates were sharply higher for upper income, at 62 percent of a total of 5.5 million apps. For lower income applicants, it was 43 percent of one million apps. Lower income denials of 34 percent were more than twice those for upper income, at 13.5 percent.
Upper income applicants asked for government mortgages at a considerably lower rate than lower income ones. Just 16 percent asked for financing insured by the Federal Housing Administration, Department of Veterans Affairs, Farm Service Agency, or the Rural Housing Service. For lower income applicants, almost 30 percent wanted guvvies, with FHA the most popular at 23 percent.
Upper income applicants were investors at a considerably higher rate than low income. Fourteen percent of upper income requests for finance were for non-owner occupied property, more than twice the six percent of lower income people who wanted non-owner occupied.
Gender rollup (percentage of apps with at least one male compared to female with no male applicant) shows a much higher percentage of low income women applying, at 42 percent to just 11 percent for upper income.
Jumbo mortgage apps were far higher for the upper income cohort, at 16 percent of volume. For lower income, this was less than one percent.
There was a huge difference in average loan amounts, as well. For upper income borrowers the average was $315,000 for a first lien and $66,000 for a subordinate one, while for lower it was just $111,000 for a first lien and $26,000 for a subordinate lien.
Manufactured housing applications favored lower income people, at eight percent of the total. For upper income people, MH share was just 1.35 percent.
Spreads were higher for lower income applicants, at 2.74 percent on a first lien and 5.47 percent for a subordinate one. In the upper income cohort, comparable numbers were 2.31 percent and 4.93 percent.
Spreads were reported only for a minority of the originations, but there was a difference here as well. Spreads were reported on 11 percent of lower income mortgages, but just 3.4 percent on upper income ones.
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)