What Do Home Mortgage Disclosure Act Data Tell Us about the Southeast

The Home Mortgage Disclosure Act of 1975 (HMDA) provides profound insights into housing market conditions, particularly focusing on mortgage lending. For instance, HMDA observations show that almost a quarter of applicants nationwide who received a decision were denied a mortgage loan, and the leading reasons for denial range from debt-to-income ratios to credit history. Furthermore, monthly mortgage payments in the Atlanta Fed's district (Alabama, Florida, Georgia, and portions of Louisiana, Mississippi, and Tennessee) are about 40 percent of area median income, compared to about 45 percent nationally.

The Atlanta Fed developed the Home Ownership Affordability Monitor (HOAM) to provide a data-driven perspective on factors affecting housing costs at granular geographies. The tool incorporates data from sources including Freddie Mac Primary Mortgage Market Survey/FRED, SmartAsset, ICE McDash Analytics, Black Knight Financial Services, and the Federal Housing Finance Agency.

The Federal Reserve System (FRS), fulfilling its mandate to promote economic development through stable prices and maximum sustainable employment, has a significant interest in ensuring that the public has continued access to lending facilities to promote homeownership, which fosters community development and economic stability.

HMDA data show a modest rebound in mortgage activity in 2024 after lending activity fell as interest rates rose in 2022 and 2023. Much of this drop in lending was the result of a reduction in refinancing activities, whereas changes in home purchases were not affected as much. With that said, the rising payment-to-income (PTI) ratio is of concern to policymakers. With PTI averages during the last two years hovering between 40 to 50 percent, affordability continues to be a major obstacle to homeownership. (It should be noted that a PTI ratio that exceeds 30 percent is generally considered unaffordable.)

At first glance, figure 1 indicates relative stability. On average, over the last four years, incomes show an overall increase, and loan amounts show an overall movement in the opposite direction. However, as we take an increasingly granular look at the drivers of homeownership insecurity, questions about affordability, access, and competition among lending options tell a more nuanced story.

Figure 1: Average Loan Amounts and Incomes

Source: HMDA data and the US Bureau of Labor Statistics

Among 30- and 15-year fixed-rate mortgages, activity rose significantly following the initial low-interest rate environment experienced during the onset of the Covid-19 pandemic, more than doubling at their peaks. This activity took place alongside a nationwide 44 percent and 32 percent drop in mortgage activity in 2022 and 2023, respectively, as Freddie Mac data reveal.

A comprehensive overview of the data reveals affordability to be at the foundation. In 2024, mortgage activity rebounded, signaling some relief in the market. However, monthly mortgage payments have remained at their peak. National figures show monthly mortgage costs closing in over 45 percent of median income since the spring of 2025, though counties in the Southeast indicate a relatively lower mortgage payment closer to 40 percent of median income.

The changes in overall volume of mortgage applications and loan originations have followed each other closely for years now. Home refinancing options became much more popular and spiked in the earlier part of the decade, as interest rates dropped to historic lows. (Applications fall into one of the following categories: loan originated, application approved but not accepted, application denied, application withdrawn by applicant, or file closed for incompleteness.) The reduction in refinancing activity that has followed can be directly tied to the concurrent rise in interest rates following rising inflation, which began to show in 2022.

Even so, figure 2 shows that home purchases among new originations continued to dominate for 2024 throughout all regions of the country, and refinancing categories still aggregate a significant share of loan purposes.

Figure 2: 2024 Mortgage Originations by Federal Reserve District

Source: HMDA data

Further examination of the data shows that 24 percent of applicants nationally who were given a decision (that is, those who were not withdrawn or filed as incomplete) were denied, though this comes at a 1.3 percent decrease going from 2023 into 2024.

Figure 3 shows that when it comes to reasons for denial across the board, debt-to-income ratios and credit history stand out. Furthermore, the Southeast has the highest denial count among all Fed districts: about 404,000 for 2024 (20 percent of all denials), compared to the average of the other 11 regions at about 145,000. Although a variety of factors contributed to this disparity-including the fact that the Southeast has a relatively high volume of applications-the rate of denial speaks to the heightened relevance of mortgage availability in this region, as well as the need to ensure access.

Figure 3: 2024 Mortgage Denials by Federal Reserve District

Source: HMDA data

Diversity across a variety of demographic groups is particularly relevant to the Southeast, which census data show has a larger minority population than other regions of the country. Historic inequities have been a fraught issue, and lending practices are among the factors that affect community development.

Although variances exist among defined races, the drivers of these discrepancies are not isolated enough for precise inference at a correlational level without a broader scope of analysis. More clearly, a general association between higher debt-to-income (DTI) ratio and denials is normal across all groups, which the data in figure 4 depict.

Figure 4: Southeast Debt-to-Income Ratios by Race

Source: HMDA data

Consumers with challenging financial conditions―signaled by riskier metrics such as high DTI, low credit score, and insufficient reserves―typically have a more difficult time obtaining mortgage loan approval, but widening competition can offer a viable path to homeownership. Concurrently, the overall market share of loan originations and applications originating outside of traditional banks has remained stable, indicating continued interest from borrowers choosing from a variety of options, including credit unions and other wholesale lenders. As nontraditional banking appears to be on a path of sustained growth and market concentration shifts throughout the country, it will be important for regulators to consider potential impacts on the industry's tolerance for these riskier metrics among a growing set of viable competitors. If concerns regarding affordability persist, the possibility of higher systemic volatility in the form of defaults following growing tolerances could overshadow this growing array of choices available to them.

During the last four years, the housing market has demonstrated different behaviors depending on region, but the Southeast is seeing particularly strong impacts. As affordability is a major source of homeownership, HMDA's total loan costs category further clarifies the discrepancies among districts (see figure 5).

Figure 5: Average Mortgage Loan Costs among Fed Districts

Source: HMDA data

Overall, total loan costs rose in 2022 for almost all districts, and especially so for the Sixth District (the Atlanta Fed's district), which saw a 40 percent increase. Costs have been relatively stable in the years since, but volatility for consumers amid concerns of affordability might be spurring their interest in alternative lending options.

The Southeast has experienced a surge of in-migration, particularly as living costs have risen elsewhere in the country. Florida was the fastest-growing state in 2022, with Georgia and Tennessee also among the top 10 states in population growth. These conditions, combined with the low interest rate environment, are likely contributing to a very tight, consumer-driven market, further underscoring the trends observed in total loan costs.

The Southeast is an especially robust market, with a diverse range of demographics, incomes, and urban and rural geographies. The region's very nature lends itself to much analysis, and the HOAM tool speaks to the broader challenges of affordability while also providing insights into loan availability, trends in denial, and future areas of focus as the competitive landscape evolves. As expectations for lower interest rates grow, the focus on the outlook for the remainder of 2025 and beyond will also grow. As changes in inflation, employment, and market competition receive scrutiny, impacts on mortgages will remain of great interest to policymakers and the banking industry.

By Sakar Prasain, a senior statistics analyst in the Atlanta Fed's Statistics Department