Differences in subprime loan pricing across races and neighborhoods

Andra Ghent, Ruben Hernandez-Murillo and Michael Owyang

No 2011-033, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood- level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the differences in subprime mortgage rates in terms of racial and ethnic groups and neighborhood characteristics. We find evidence of adverse pricing for blacks and Hispanics. The evidence of adverse pricing is strongest for purchase mortgages and mortgages originated by non-depository institutions.

Keywords: Subprime mortgage; Housing policy; Discrimination in mortgage loans (search for similar items in EconPapers)
Pages: 55 pages
Date: 2011
New Economics Papers: this item is included in nep-ure
Note: Originally submitted as “Race, Redlining, and Subprime Loan Pricing.”
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://s3.amazonaws.com/real.stlouisfed.org/wp/2011/2011-033.pdf Full text (application/pdf)

Related works:
Journal Article: Differences in subprime loan pricing across races and neighborhoods (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2011-033

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2011.033

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().