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Have men and women become equal in the housing market? effects of gender on mortgage rate

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Abstract

This study employed data on US mortgage rates from 2009 to 2017 to study the effect of gender on the mortgage rate. Preliminary examination revealed that women faced a comparatively high mortgage rate. This condition was most severe during 2012–2014, when female borrowers must pay an average of 0.1 percentage points higher rates than male peers. However, regression analysis indicated that income might exert diverse effects on the interest rates received by women. In terms of default risk assessment, lenders may distinguish between female borrowers with different incomes, causing income to become the key factor determining the interest rate received by female borrowers. This study adopted income as a threshold condition to estimate the effect of various default risk factors on mortgage rates. The obtained result indicated that during 2009–2017, women’s status shifted from disadvantageous to advantageous in the mortgage market. Female borrowers who belonged to the highest income group received their lowest interest rates in 2015–2017, which were 0.026 percentage points lower than those faced by male peers in the same financial position. Based on relevant behavioral differences between men and women proposed in literature, reasons for this phenomenon are proposed.

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Notes

  1. Cheng et al. (2011) mentioned that compared to the extensive body of literature on racial disparity in nearly all aspects of mortgage lending, research on gender disparity is virtually nonexistent.

  2. The hypothetical housing market in this study was efficient, meaning that the transaction price of real estate indicates the actual value.

  3. Data source: FHFA. For more information, please see the website: https://www.fhfa.gov/DataTools/Downloads.

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Acknowledgements

I am immensely grateful to Professor Peter Boelhouwer (Editor−in−Chief) and the three anonymous referees for the constructive comments of this paper. Funding from the Ministry of Science and Technology of Taiwan under Project No. MOST−110−2410−H−390−008−MY3 has enabled the continuation of this research and the dissemination of these results.

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Authors and Affiliations

  1. Department of Finance, National University of Kaohsiung, No. 700, Kaohsiung University Rd., Nanzih District, Kaohsiung, 811, Taiwan

    I-Chun Tsai

  2. Anfu Institute for Financial Engineering, National Tsing Hua University, No. 101, Section 2, Kuang-Fu Rd., Hsinchu, 300, Taiwan

    I-Chun Tsai

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Tsai, IC. Have men and women become equal in the housing market? effects of gender on mortgage rate. J Hous and the Built Environ 37, 2157–2177 (2022). https://doi.org/10.1007/s10901-022-09944-2

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