Women pay higher mortgage rates in 49 states
In Mississippi, single women paid an average of 3.47% on a conventional 30-year fixed-rate mortgage in 2019. But single men paid an average of 3.37%, according to the latest available HMDA data. Over the life of the mortgage, the single woman in this case will have about $ 7,000 more in mortgage payments than the single man.
Patrick Boyaggi, CEO and founder of a Massachusetts-based lending startup OwnUp, argues that this issue has not received enough attention in the mortgage industry. His analysis of HMDA data found that women paid higher mortgage rates than men in 49 of the 50 states, the only exception being Alaska (the analysis assumes the loan amount averaged $ 345,000 and the prime rate was 3.00%).
“The latest HMDA data shows this in a surprisingly clear way – women are largely excluded from the conversation,” Boyaggi said. “Recent data from HMDA confirms that discrimination in the housing finance process is very real.
The main reason? Many female borrowers simply fail to find the best possible rate, resulting in thousands of dollars being lost over the entire term of their loan. ”
Boyaggi admits her analysis isn’t exactly revealing – she was well documented that women pay higher mortgage rates, and the reasons are many and complex.
He said he did not intend to undertake a sociological study to determine all the reasons why women pay more. It is more important to recognize that there is a problem and take action, he said.
HousingWire recently spoke with Tom Hutchens, executive vice president of production at Angel Oak, who spoke about how non-QM loans could be an effective way for lenders to replace lost business when the boom slows down. of the refi.
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“I’m not sure everyone is aware of this or thinks it’s a real problem,” Boyaggi said. “We think it’s a systemic problem… women aren’t being treated fairly… For us, it’s really about not being 50-50. And so, it is a systemic problem. Let’s shed some light on this first and start worrying about solutions rather than trying to quibble about why this is a problem. It is a problem. We know this is a problem. How can we improve it, rather than trying to justify it or find some kind of justification for it.
According to Boyaggi’s analysis of HMDA data, the five states where women overpay the most for a mortgage were Mississippi ($ 7,077 delta over mortgage), Alabama (6,006 delta $), Ohio (delta of $ 5,856), Florida (delta of $ 5,591) and New Jersey (delta of $ 5,515).
Single women typically paid between 8 and 10 basis points more for a mortgage. In Alaska, single women paid an average of 3.21% while single men paid 3.23%, according to Boyaggi. The other four best states for women applying for mortgages were Maine, Wyoming, Montana, and Oregon. Single women paid between 1 and 3 basis points more on mortgage rates in these states than single men.
a Urban Institute 2016 study found that single women paid off their mortgages better than single men, even though they paid higher rates. The study also found that single borrowers, especially women, are more likely to be from minorities, low-income areas, and they are more likely to have a mortgage that consumes a higher percentage of their income. income.
“One possible explanation is that women, especially minority women, experience higher subprime lending rates than their male peers,” the Unemployment Insurance study said. “Another explanation is that women tend to have lower credit profiles. We find that both of these explanations are true and largely explain the higher rates. “
Although subprime lending has declined since the study was published, mortgage underwriting standards in general have been much stricter since the financial crisis and are not particularly flexible.
“There is sort of a standardized and universal mortgage underwriting standard, and it’s not very good at accommodating minority borrowers in general, or anyone with a non-typical, non-generic credit profile” Guy Cecala, CEO of Inside mortgage financing, Recount Wharton Business Radio in 2016. “Minority buyers in general are getting fewer mortgages than before. The good news is, they don’t get subprime loans because the subprime market has completely dried up, but they don’t get mortgages at all in many cases.
When asked if there could be a potential level of prejudice against female borrowers, Cecala said in the same interview, “I think there may be. The mortgage market prides itself on being color blind and essentially using a black box, but any sort of black box essentially discriminates against single borrowers, low income borrowers, and borrowers with a lower credit rating. If it turns out that they are mostly women, you have to assume that they are getting this kind of treatment in the mortgage market. “
Boyaggi, whose Own Up company helps consumers purchase mortgages and negotiates prices on their behalf, said more awareness was just needed.
“There’s a lot going on in this industry where, if you just looked at it, you’d be like, ‘Oh, 10 basis points, 0.010%.’ What are we talking about? ‘ “, did he declare. “But if you were to say, ‘Hey, this gas station charges women 10 cents more than men,’ we’d be in an uproar. There would be stories about it everywhere, right? People would vilify this gas station, and rightly so.