Gender and Mortgage Choice: More Evidence on Gender Based Risk Aversion

31 Pages Posted: 6 Aug 2010

See all articles by Irina Paley

Irina Paley

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Chau Do

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Date Written: June 1, 2010

Abstract

We study the effect of gender in a new financial behavior context: the choice of a mortgage. While adjustable rate mortgages are initially cheaper, they expose the borrower to interest rate risk. Using national lender data, we find that propensity to apply for an adjustable rate mortgage among higher income applicants is 2.6-10 percentage points, or 10-50%, lower for women. Results are robust to inclusion of education and financial determinants of mortgage choice. We also find that among ARM applicants, women show propensity for contracts with longer initial fixed rate period. Results are consistent with past findings of females being more risk averse than males, as well as financial literacy increasing with income and wealth.

Keywords: mortgage choice, gender, risk aversion, financial literacy

JEL Classification: D1, G11, J16

Suggested Citation

Paley, Irina and Do, Chau, Gender and Mortgage Choice: More Evidence on Gender Based Risk Aversion (June 1, 2010). Available at SSRN: https://ssrn.com/abstract=1653939 or http://dx.doi.org/10.2139/ssrn.1653939

Irina Paley (Contact Author)

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

Chau Do

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

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