Do Minorities Pay More for Mortgages?
Neil Bhutta and
No 2020-007, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)
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 (search for similar items in EconPapers)
JEL-codes: G21 G28 R51 (search for similar items in EconPapers)
Pages: 45 p.
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2020-07
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