We find statistically significant gaps by race and ethnicity in interest rates, but are exactly offset by differences in discount points; we find no differences in total fees by race or ethnicity

Bhutta, Neil and Hizmo, Aurel, Do Minorities Pay More for Mortgages? (March 14, 2019). SSRN, http://dx.doi.org/10.2139/ssrn.3352876

Abstract: We test for discrimination against minority borrowers in the prices charged by mortgage lenders. We construct a unique dataset of federally-guaranteed loans where we observe all three dimensions of a mortgage’s price: the interest rate, discount points, and fees. While we find statistically significant gaps by race and ethnicity in interest rates, these gaps are exactly offset by differences in discount points. We trace out point-rate price schedules and show that minorities and whites face identical schedules, but sort to different locations on the schedule. Such sorting likely reflects differences in liquidity or preferences, rather than lender steering. Indeed, we also provide evidence that lenders generate the same expected revenue from minorities and whites. Finally, we find no differences in total fees by race or ethnicity.

Keywords: Discrimination, Fair Lending, Mortgage, Points, Interest Rate, FHA, Consumer Protection, High-Cost Mortgage
JEL Classification: G21, G28