New Results on the Disparities between Same-Sex and Different-Sex Couples in the Home Mortgage Market

Abstract

Despite improving public sentiment towards same-sex couples, research suggests that they still face discrimination in various markets. We empirically estimate disparities between same-sex and different-sex couples in the home mortgage market, an under-studied, yet important, market. Improving previous research, we use confidential administrative data on the universe of home mortgage applications in the US from 2018 until 2021. We identify same-sex and different-sex couples according to the gender of the mortgage applicant and co-applicant. Then, controlling for a rich set of lender, borrower, and loan characteristics, some of which are important in mortgage decisions but were not available in previous research like credit scores, we find that same-sex couples are 8.8 percent more likely to be denied a home mortgage than similar opposite-sex couples and conditional on being approved, are quoted an interest rate that is 0.8 percent higher. We explore heterogeneity by regions, by acceptance of same-sex marriage, and pre- and post-COVID. Interestingly, we also find that same-sex couples default significantly more (53.9%) than similar different-sex couples, which suggests an unobserved characteristic that causes same-sex couples to default more, and could explain a part of observed disparities in mortgage approval, undermining results in previous research.

Keywords: same-gender couples, same-sex couples, LGBT, residential mortgage, discrimination, disparities

JEL Classification: D1, D4, G2, G5