Do Minorities Pay More for Mortgages?

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.

Automated summary

The study found statistically significant gaps by race and ethnicity in mortgage interest rates, but these differences are offset by variations in discount points. Minorities and whites face identical rate schedules, but are located in different positions. Ultimately, there are no differences in total fees by race or ethnicity in mortgage lending.