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Differences in the Cost of Mortgage Credit Implications for Discrimination

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  • Crawford, Gordon W
  • Rosenblatt, Eric

Abstract

This paper estimates the mortgage interest rate differences paid by Asian, Hispanic, and African-American borrowers to a national home mortgage lender in the years 1988-89. Controlling for differences in market rates, rate lock protection, and borrower risk factors, conventional loan interest rates are almost perfectly race-neutral. The single deviation from race-neutrality is that when interest rates fall during the borrower's rate-lock period, only African-American borrowers are unable to capture a share of this decline. Government (FHA and VA) credit models show small premia paid by African-American borrowers of about $1.80 per month on average. In government lending, Hispanic borrowers alone are unable to capture rate declines occurring during the borrower's rate-lock period. Copyright 1999 by Kluwer Academic Publishers

Suggested Citation

  • Crawford, Gordon W & Rosenblatt, Eric, 1999. "Differences in the Cost of Mortgage Credit Implications for Discrimination," The Journal of Real Estate Finance and Economics, Springer, vol. 19(2), pages 147-159, September.
  • Handle: RePEc:kap:jrefec:v:19:y:1999:i:2:p:147-59
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    Cited by:

    1. James Kau & Donald Keenan & Henry Munneke, 2012. "Racial Discrimination and Mortgage Lending," The Journal of Real Estate Finance and Economics, Springer, vol. 45(2), pages 289-304, August.
    2. Stephen L. Ross, 2005. "The Continuing Practice and Impact of Discrimination," Working papers 2005-19, University of Connecticut, Department of Economics, revised Jul 2006.
    3. Solomon Y. Deku & Alper Kara & Phil Molyneux, 2014. "Access to Consumer Credit in the UK," Working Papers 14004, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    4. Yan Zhang, 2013. "Fair Lending Analysis of Mortgage Pricing: Does Underwriting Matter?," The Journal of Real Estate Finance and Economics, Springer, vol. 46(1), pages 131-151, January.
    5. W.H.J. Hassink & M. van Leuvensteijn, 2003. "Price-settings and Price Dispersion in the Dutch Mortgage Market," Working Papers 03-07, Utrecht School of Economics.
    6. Black, Harold A. & Boehm, Thomas P. & DeGennaro, Ramon P., 2003. "Is there discrimination in mortgage pricing? The case of overages," Journal of Banking & Finance, Elsevier, vol. 27(6), pages 1139-1165, June.
    7. Blanchard, Lloyd & Zhao, Bo & Yinger, John, 2008. "Do lenders discriminate against minority and woman entrepreneurs?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 467-497, March.
    8. repec:use:tkiwps:077 is not listed on IDEAS
    9. Nothaft, Frank E. & Perry, Vanessa G., 2002. "Do mortgage rates vary by neighborhood? Implications for loan pricing and redlining," Journal of Housing Economics, Elsevier, vol. 11(3), pages 244-265, September.
    10. Barrutia Legarreta, José María & Espinosa Alejos, María Paz, 2012. "Consumer Expertise or Credit Risk? An empirical analysis of mortgage pricing," DFAEII Working Papers 2012-04, University of the Basque Country - Department of Foundations of Economic Analysis II.
    11. Stephen L. Ross, 2003. "What Is Known about Testing for Discrimination: Lessons Learned by Comparing across Different Markets," Working papers 2003-21, University of Connecticut, Department of Economics, revised Nov 2003.
    12. Wendy Edelberg, 2007. "Racial dispersion in consumer credit interest rates," Finance and Economics Discussion Series 2007-28, Board of Governors of the Federal Reserve System (U.S.).
    13. Lloyd Blanchard & Bo Zhao & John Yinger, 2005. "Do Credit Market Barriers Exist for Minority and Women Entrepreneurs?," Center for Policy Research Working Papers 74, Center for Policy Research, Maxwell School, Syracuse University.
    14. Song Han, 2011. "Creditor Learning and Discrimination in Lending," Journal of Financial Services Research, Springer;Western Finance Association, vol. 40(1), pages 1-27, October.
    15. Ping Cheng & Zhenguo Lin & Yingchun Liu, 2015. "Racial Discrepancy in Mortgage Interest Rates," The Journal of Real Estate Finance and Economics, Springer, vol. 51(1), pages 101-120, July.

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