Do Minorities Pay More for Mortgages?

Higher-priced home lending and the 2005 HMDA data

Neil Bhutta and Aurel Hizmo

The Review of Financial Studies, 2021, vol. 34, issue 2, 763-789

Abstract: We test for racial discrimination in the prices charged by mortgage lenders. We construct a unique data set from which we observe the three dimensions of a mortgage’s price: the interest rate, discount points, and fees. Although 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.

JEL-codes: G21 G28 R51 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (34)

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