The Journal of Real Estate Finance and Economics

, Volume 51, Issue 1, pp 101-120

First online:

Racial Discrepancy in Mortgage Interest Rates

  • Ping ChengAffiliated withDepartment of Finance, College of Business Florida Atlantic University
  • , Zhenguo LinAffiliated withDepartment of Finance, California State University Email author 
  • , Yingchun LiuAffiliated withDepartment of Finance, California State University

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Existing research on racial discrimination in mortgage lending has overwhelmingly focused on whether black applicants are more likely to be denied for credit than comparable white applicants. This study investigates whether the approved black applicants are likely charged higher interest rates than their white counterparts. Using data from three waves of the U.S. Survey of Consumer Finance, our results suggest that black borrowers on average pay about 29 basis points more than comparable white borrowers. We also find that rate disparity mainly occurs to young borrowers with low education as well as those borrowers whose income and credit disqualify them for prime lending rates. Furthermore, among borrowers in the higher rate groups, black women seem to receive much more disparate treatment than black men. We conclude that, while the racial disparity in mortgage rates is widespread between black and white borrowers, it is the more financially vulnerable black women who suffer the most.


Racial discrimination Gender discrimination Mortgage interest rate