Are Minorities Still Paying Higher Mortgage Interest Rates?

The literature on racial differences in mortgage interest rates is mixed depending on samples, sample period, and product types. Mortgage loans that originated during the period between 2011 and 2019 from the 2013, 2016 and 2019 waves of the Survey of Consumer Finance were examined using weighted regressions with the repeated imputation inference method. During the whole sample period, Hispanics and Blacks paid 40 and 22 basis points (bp) higher rates than Whites at the one percent and ten percent statistical significance levels, respectively, after loan characteristics, such as term and adjustable rate, and borrower credentials, like net worth and debt to income, were controlled for. An analysis with time trend shows that Blacks paid higher rates by 56 bp in the base year but the gap decreased by 6.6 bp per year. The loan pricing gap disappeared by the end of sample period. However, Hispanics did not experience a reduction in rate differentials over time.