The Determinants of Mortgage Denial Using Public Data

We analyze over 30 million home purchase mortgage applications from 2018-2024 using publicly available Home Mortgage Disclosure Act (HMDA) data to study the determinants of mortgage denial. We establish three primary findings. First, credit access is highly sensitive to monetary policy; the 2022-2023 tightening drove aggregate denial rates from 12.2% to 15.7% via the debt-to-income (DTI) channel. Second, we identify a critical nonlinearity in underwriting: While the 43% qualified mortgage (QM) threshold---below which lenders receive legal safe harbor from ability-to-repay claims---is non-binding in practice, denial rates jump by 15-17 percentage points at the 50% DTI mark, marking the functional market boundary. Third, substantial racial disparities persist; controlling for lender fixed effects and financials, Black applicants are 7.8 percentage points more likely to be denied than White applicants. Observable characteristics explain at most 41% of this gap. These results demonstrate how monetary tightening interacts with structural inequalities to disproportionately restrict credit access for vulnerable populations at the extensive margin.