With real estate making up to 20% of the economy, changes in mortgage rates affect multiple things across the economy. When mortgage rates are low, there is more consumer confidence to spend money. When they’re high, it’s usually a sign that people are spending less.
However, unsurprisingly, high mortgage rates negatively impact the Black community in two key ways.
First, when mortgage rates climb, the economy slows down. When the economy slows down, companies stop hiring. The Black community is typically the first group to feel the slow-down effects. Black unemployment is already the highest in the nation. If hiring stops, we’re the ones who suffer.
But hiring isn’t the only way high mortgage rates affect our community.
Black home buyers already pay higher interest rates and higher finance fees on mortgages. Brett Theodos, a senior fellow at the Urban Institute, notes that due to systemic issues like enslavement, Jim Crow, and “redlining by banks [have]excluded Blacks from affordable homeownership [and] has resulted in lower homeownership rates for Blacks [and] paying more for mortgages.”
High mortgage rates have a strong ripple effect on the rest of the economy and may change how people shop, spend and save their money. When mortgage rates increase, the overall impact on the Black community is felt in more ways than one.