Barclays Research Examines How GSE Affordability Targets Offset Income and Racial Imbalances in Homeownership
October 13 2020 - 8:30AM
Business Wire
A new Barclays Impact Series report highlights considerations
for housing finance reform and its impact on rising income
inequality on low-income and minority homebuyers
Barclays today released the eighth edition of its Impact Series
entitled, “Housing finance reform: Addressing a growing divide.”
The research report examines how the rise in income inequality
exerts downward pressure on homeownership. While government support
may have the effect of encouraging better-off households to
purchase larger, more expensive houses, Barclays’ independent
research indicates that affordability targets have acted as a
buffer against widening levels of income inequality.
The report’s analysis finds that regulators’ affordability
targets, which were first imposed on the two largest
mortgage-finance companies in 1992, have tempered the negative
impact of income inequality by as much as 60%. This has allowed the
US to achieve similar levels of homeownership to other developed
countries, despite higher levels of income inequality. Data further
suggests that underrepresented and minority households in
particular have benefitted from the policies, even as affordability
targets have fallen in recent years.
“From a housing policy perspective, this does not translate into
support for the status quo,” says Jeff Meli, Global Head of
Research and lead author of the report. “Many interventions in the
housing market should be reviewed and may be unnecessary, and we
cannot ignore the lessons from the financial crisis. But as we
consider options for reform now, amidst both a pandemic that is
likely to further raise income inequality, and a heightened
awareness of racial and social justice reforms, we believe that low
income and minority populations face risks to homeownership through
any reform of housing finance that cannot be ignored.”
This report adds to a rich and existing body of research
contributing to the wider public discussion around considerations
when reforming the post-2008 US mortgage finance system.
The Impact Series uses data-driven analysis to explore the
social impact of economic, demographic and disruptive changes
affecting markets, sectors and society at large. The key findings
of today’s report include:
- Higher income inequality is strongly associated with lower
homeownership, implying that the increase in inequality has exerted
significant downward pressure on US homeownership.
- Affordability targets introduced by the 1992 GSE Act helped
reduce the negative impact of income inequality on homeownership by
between 40% and 60%, and also helped the US maintain high
homeownership rates.
- The negative effects of income inequality on homeownership
accrue disproportionately to Black residents. The negative effect
of income inequality on homeownership is 2.4 times higher in the
states with the highest Black populations than in states with the
lowest Black populations, and these same states benefited the most
from the introduction of affordability targets.
For more information, please view the full report and executive
summary infographic.
About Barclays
Barclays is a British universal bank. We are diversified by
business, by different types of customer and client, and geography.
Our businesses include consumer banking and payments operations
around the world, as well as a top-tier, full service, global
corporate and investment bank, all of which are supported by our
service company which provides technology, operations and
functional services across the Group. Barclays offers investment
banking products and services in the US through Barclays Capital
Inc. For further information about Barclays, please visit our
website home.barclays.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201013005114/en/
Matt Scully +1 212 526 7844 matthew.scully@barclays.com
Barclays (LSE:BARC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Barclays (LSE:BARC)
Historical Stock Chart
From Apr 2023 to Apr 2024