Is There Discriminatory Mortgage Pricing Against Immigrants in the Spanish Lending Market?

37 Pages Posted: 21 Mar 2011

See all articles by Luis Diaz-Serrano

Luis Diaz-Serrano

Rovira i Virgili University; IZA Institute of Labor Economics

Josep Raya

Universitat Pompeu Fabra

Abstract

In this paper, we investigate whether evidence of discriminatory treatment against immigrants in the Spanish mortgage market exists. More specifically, we test whether, ceteris paribus, immigrant borrowers tend to be charged with higher interest rates on their mortgages than their Spanish born counterparts. To do so, we use a unique dataset on granted mortgages that contains information not only regarding the conditions of the loan but also the socio-economic characteristics of the mortgagors. We observe that immigrants are systematically charged with higher interest rates. We apply the well known Oaxaca-Blinder decomposition to measure the extent to which this disparate treatment of lenders in mortgage pricing against immigrants is due to discrimination. Our results indicate that approximately two thirds of the gap in the interest rate between Spanish born and immigrant borrowers can be attributed to discriminatory treatment.

Keywords: immigration, discrimination, mortgage pricing, housing market

JEL Classification: R21, G21, J14

Suggested Citation

Diaz-Serrano, Luis and Raya, Josep, Is There Discriminatory Mortgage Pricing Against Immigrants in the Spanish Lending Market?. Available at SSRN: https://ssrn.com/abstract=1790689 or http://dx.doi.org/10.2139/ssrn.1790689

Luis Diaz-Serrano (Contact Author)

Rovira i Virgili University ( email )

Campus Sescelades, Carretera de Valls s/n
43006 Tarragona, Tarragona 43007
Spain

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Josep Raya

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

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