Today’s mortgage rates have been steadily increasing from approximately 6% in the past few months. A mortgage is a financial agreement between an individual and a lender that allows them to borrow money to purchase or refinance a home. If the homeowner fails to pay back the mortgage, the lender has the right to take your property. While these increases may feel like a sharp change, this isn’t a new phenomenon for some demographics. Everyone will suffer if the government or other organizations such as the Homeowner Association does not properly address this issue. The issue first started with communities of color so this is where the problem should be first addressed.
As of June 1, the 30-year fixed-rate mortgage average interest rate sits at 7.07%, which rose from 6.57% just the week before. Each week it keeps climbing the charts but as of a year ago, the 30-year fixed-rate was around 5%. The most common amount of time, or “mortgage term,” is 30 years in the U.S. and today most Americans are dying with unpaid mortgages.
This is a nightmare for the United States as a first-world country. But, this setback is nothing new to people of color in America, specifically Black Americans, who were often blocked from homeownership. This is problematic because mortgage rates have always been a challenge for certain groups but the media is finally addressing it now because it is affecting all Americans.
For historical reference, postwar suburbia included a new set of problems due to the Great Depression. In 1933, housing prices declined while mortgages were in default. Shortly thereafter, under President Franklin Roosevelt, Congress made a national policy to protect homeownership called The Home Owners Loan Corporation, HOLC. HOLC refinanced loans about to be foreclosed and gave mortgage loans to allow owners to reclaim foreclosed homes. Systematic appraisal methods, including questionnaires relating homeowner’s occupation, income, ethnicity and age, for determining a property’s value were created too.
Minorities often got low ratings when it came to real estate leading to illegal segregation and discrimination against minority and immigrant neighborhoods known today as “redlining.” Mortgages and other financial assistance were regularly denied to ethnically diverse neighborhoods. However, high and middle-class White Americans were thriving during this period.
In the end, the effects are still felt today. According to the Pew Research Center, Black and Hispanic Americans are more likely to rent than any other racial group in the U.S. These two groups’ household median incomes also are the lowest. This is a clear disadvantage when it comes to home-owning and affordable housing. The systemic problems with disenfranchising minorities must be addressed first if the mortgage rate problem wants to be properly fixed.
If the government or homeowners association wants to address the problem of mortgage rates and affordable housing then it must be addressed at the root. This must start with fixing the problem within diverse communities because these were the first who were systematically oppressed. Because when the problem is first addressed at the root with Black and Brown communities then America may have a clearer plan going forward. The government and other organizations cannot continue to beat around the bush because everyone will continue to suffer.