Discrimination and Racial Differences in Home Mortgage Interest Rates

Posted: 3 May 1998

See all articles by Gordon Crawford

Gordon Crawford

Independent

Eric Rosenblatt

Federal National Mortgage Association (Fannie Mae) - Research

Date Written: May 1995

Abstract

This paper estimates the possible yield premia paid by Asians, Hispanics, and African Americans borrowers to a national home mortgage lender in the years 1988-1989. The calculated premia are defined to hold daily market rates, rate lock protection, and borrower risk factors constant. Conventional loan interest rates are almost perfectly race- neutral. However, government (FHA and VA) credit models show significant, but very small premia paid by Hispanics and African Americans. The estimated premium for Hispanic borrowers is not robust to some reasonable alternative specifications. The differential for African American borrowers is more robust, but may be explained by the inability of African Americans to find alternatives to their rate commitments when rates fall.

JEL Classification: G1, J7

Suggested Citation

Crawford, Gordon and Rosenblatt, Eric, Discrimination and Racial Differences in Home Mortgage Interest Rates (May 1995). Available at SSRN: https://ssrn.com/abstract=9086

Gordon Crawford (Contact Author)

Independent

No Address Available

Eric Rosenblatt

Federal National Mortgage Association (Fannie Mae) - Research ( email )

16517 Keats Terrace
Derwood, MD 20855
United States

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