Do Minorities Pay More for Mortgages?
45 Pages Posted: 21 May 2020
Date Written: January 31, 2020
We test for racial discrimination in the prices charged by mortgage lenders. We construct a unique dataset where we observe all three dimensions of a mortgage's price: the interest rate, discount points, and fees. While we find statistically significant gaps by race and ethnicity in interest rates, these gaps are offset by differences in discount points. We trace out point-rate schedules and show that minorities and whites face identical schedules, but sort to different locations on the schedule. Such sorting may reflect systematic differences in liquidity or preferences. Finally, we find no differences in total fees by race or ethnicity.
Keywords: Discrimination; Fair lending; Mortgage; Points; Interest rate; FHA; Consumer protection; High-cost mortgage
JEL Classification: G21; G28; R51
Suggested Citation: Suggested Citation