Miami has the highest rate of mortgage declines in the U.S.

DORAL, FL – According to a study by LendingTree, an online loan marketplace, Miami has the highest rate of mortgage declines in the country as 11.6 percent of all mortgage applications filed are denied.

The firm concluded this after analyzing more than 10 million mortgage application records using data from the Federal Home Mortgage Disclosure Act.

This number is higher than the national rate for mortgage declines, which is 9.8 percent according to LendingTree.

Other cities in Florida are relatively close to Miami and rank as the top four slots in the list of top 50 metros for mortgage declines. These are Orlando (11 percent decline rate), Tampa (9.5 percent) and Jacksonville (9.5 percent).

The three cities with the lowest rate of mortgage declines were Minneapolis (4.6 percent), Salt Lake City (4.9 percent) and Kansas City (4.9 percent).

Between the reasons behind this new scenario, a high debt-to-income ratio was the main one as 32.4 percent of the applications were denied because of it.

Lack of collateral (meaning the lender’s appraisal of the property is lower than the asking price) accounted for nearly 23 percent of declines.

Let’s not forget that Miami has been ranked for several years as one of the worst cities in the U.S. in terms of cost-burdened renters, which means that in this city people spend more than 30 percent of their income on rent.

But regardless of Miami’s behavior, the study concluded that the percentage of 2018 mortgage denials across the U.S. were at their lowest rate since 2004.

“The low denial rate is encouraging, though some of this is because the financial profile of mortgage applicants has improved,” wrote LendingTree chief mortgage economist Tendayi Kapfidze.

“The key for homebuyers is to be well-educated on the homebuying and mortgage process,” adviced the expert.

Key findings of national mortgage declines

– Nearly 1 in 10 borrowers get denied for mortgages.

– Debt and credit history are the biggest barriers. The leading reasons for denial were debt-to-income at 33% and credit history (which includes credit score) at 23% of denied loans.

– Collateral was the third-highest denial reason at 17%.

– Good professional help is important. Incomplete applications were fourth at 13% and unverifiable information was sixth at 8%.

– Miami and Tampa had disproportionately high rates of collateral as a denial reason.

– There are discrepancies by race and ethnicity. African-American borrowers have the highest denial rates at 17.4%, and Non-Hispanic whites have the lowest at 7.9%.

 

*With the information of LendingTree website and The Miami Herald.