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 1988–1989. 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.
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Crawford, G.W., Rosenblatt, E. Differences in the Cost of Mortgage Credit Implications for Discrimination. The Journal of Real Estate Finance and Economics 19, 147–159 (1999). https://doi.org/10.1023/A:1007831506399
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DOI: https://doi.org/10.1023/A:1007831506399