THE BRONX — The South Bronx real estate market may be heating up, but the residents have a tougher time getting home loans than residents of any other borough, according to a city report.
Approximately 30 percent of all home loan applications were denied in The Bronx, an amount well above New York's denial rate of 23 percent and almost twice as high as Manhattan's 17 percent, according to a new report from the Department of Finance examining banking needs throughout New York City.
Assistant Commissioner Elaine Kloss attributed the high denial rate to a variety of possible factors, including the borough's comparatively low income levels and banks' reluctance to give out subprime loans following the 2007 recession.
"The people that could have qualified legitimately for subprime loans are now getting nothing," she said, "so it’s driving up the denial rate."
Fordham South had the highest denial rate throughout The Bronx at 60 percent, followed by East Tremont at 47.7 percent, Highbridge at 45.9 percent and Melrose South at 44.1 percent.
The neighborhood with the lowest home loan denial rates was Brooklyn's Windsor Terrace at 12.3 percent, followed by the Upper East Side at 12.5 percent.
The numbers are from 2013, so the nascent status of the South Bronx as New York's next trendy spot might not be fully apparent yet, according to Dr. Daniel Miles, director at Econsult Solutions, the economic consulting company that submitted the report to the finance department.
"Some of that might not be reflected in this data yet," he said. "It might take another year or two to kind of filter into the data."
Although the report also notes that The Bronx has the highest percentage of minority neighborhoods in the city, Marlene Cintron, president of the Bronx Overall Economic Development Corporation, said she did not think race was behind the borough's small amount of successful home loans.
"I really see this as a poverty issue," she said. "There are a lot of issues surrounding this. You can't simplify it."
Miles and Kloss maintained that the limitations of their data made it difficult to determine how large of an impact race played on loan approvals or denials.
"We can’t go in and see which loans were denied and who applied, what their race was," she said, "so it’s hard to reach a conclusion."
Borrowing difficulties in The Bronx are not just restricted to home loans. According to the report, the borough also has the lowest amount of business loans per 1,000 businesses at just 175, compared to 329 in Brooklyn and 288 in Manhattan.
Although the city has limited data on the types of borrowers seeking these loans, Kloss suggested the low numbers could reflect the newness of Bronx businesses.
"Startup businesses really struggle to get financing," she said. "The data doesn’t say how long these businesses have been in existence, so if it’s a new business, it could have been denied a loan because they just haven’t been in operation very long."
She stressed that banks had become much more cautious about lending money since the recession, which could make things particularly difficult for low income areas like the South Bronx.
"Since we’ve come out of this recession, banks have really tightened credit lending," she said. "Credit is very, very tight, even for people that qualify."
Cintron offered a blunter assessment of the lack of loans in her borough.
"Obviously, based upon this report, the banks are failing us," she said.
