What is Measured in Measuring the Mortgage Market

Mortgage activity has commonly been measured with two variables: the volume of loans and the success rate of applications. I argue that these measurements represent distinct portions of the overall mortgage market and correspond to different social, racial, and economic attributes. Using Home Mortgage Disclosure Act data for 1991 and 1992 in the Minneapolis-St. Paul metropolitan area, I compare a variable measuring the percentage of loan applications denied with a variable measuring the number of loans per 1,000 housing units. I find that these two variables display disparate spatial patterns, that they are associated with different census tract characteristics, and that they correspond to separate dimensions of social geography. These differences suggest that the evaluation of bank performance in meeting fair housing objectives depends on how this performance is measured. Both measurements are useful, but care must be taken in their application.

Key Words:

• mortgage market
• social geography
• variable measurement
• financing