Differences in the Cost of Mortgage Credit Implications for Discrimination
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
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