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Residential Department: BackSpace: November 2016



Women face inequities in mortgage borrowing

Several government studies have established that women, on average, earn less money than men. Much less has been written about how this wage gap may create inequities for women when they borrow money to purchase homes. Single women are a hugely important demographic for the housing market, however.

Unmarried women are the second most important homebuying group, after married couples, and purchase a greater share of houses than do men, according to the National Association of Realtors and other studies.

Single women also pay a price for the earnings gender gap, a recent report from Urban Institute suggests. Despite having lower average loan-default rates than men, women pay higher average interest rates and get denied more often when applying for a mortgage, the Urban Institute reported. That marketplace inequity is mostly related to how women’s lesser earnings affect traditional methods of gauging mortgage risk.

Single women, on average, have just marginally lower credit scores than men, but tend to have higher debt-to-income ratios, which can make them appear to be riskier borrowers. The Urban Institute noticed a large gender gap in incomes reported by women borrowers and in the average balances of their mortgage loans, which are significantly lower than the mortgage balances for men.

The study’s conclusions were based on an evaluation of data from some 60 million government-backed loans tracked through the Home Mortgage Disclosure Act, or HMDA. The data provides information on gender, race and limited loan-level information, such as the interest rate paid by the borrower. The Urban Institute supplemented that information with data from CoreLogic that allowed researchers to compare loan-to-value ratios and other loan-level data. The study examined the credit profiles and loan performance of men, women and married couples across three time frames: just before the recession, the years immediately following the housing crash, and during the recent housing-market recovery.

This subject has not been previously studied in much detail. “It just didn’t look like there had been a lot of work done on gender,” says Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center. “We had actually looked at the combined data set, which we had used for a number of studies and thought, ‘Gee, this could be really interesting.’”

The data suggests that women are being shortchanged in the mortgage-approval process.

There are some characteristics of [women borrowers]
that could be better captured in credit scores.
— Laurie Goodman, Co-director, Urban Institute’s Housing Finance Policy Center

For loans originated after 2008, the 90-day mortgage-default rate for single women is, on average, 6 basis points lower than the rate recorded for male borrowers, and the default rate is 75 basis points lower for loans originated during the bubble era between 2004 and 2007.

Still, over the 10-year period ending in 2014, single women paid higher average mortgage interests rates (5.48 percent compared to 5.41 percent for men). Women aren’t drastically overpaying for their mortgages. The risk penalty amounts to $150 or less per mortgage, according to the Urban Institute. More concerning to the policy center, however, is that women are being denied mortgages at higher rates. The study’s authors noted that this has broader implications because a large percentage of single women are minorities.

The problem is not easy to correct, however. Goodman says lenders haven’t been intentionally discriminating against women. The problem is that the traditional measures used to gauge default risk aren’t accurately capturing the true performance of mortgage loans held by single women. The study concludes that the industry needs to adopt “more robust and accurate measures of risk” that take into account actual loan performance.

“I think that there are some characteristics that could be better captured in credit scores, perhaps,” Goodman says. She notes, however, that the mortgage data through 2014 was based on old credit-scoring models.

“It could be that they’re already captured in the more updated versions,” she says.

Sacramento, California-based Realtor Elizabeth Weintraub isn’t surprised by the findings. She says she has noticed subtle differences between male and female homebuyers, and the wage gap is apparent when they are looking around for homes. Women, particularly younger, first-time female buyers, often face greater challenges in home purchases.

“Women do make less than men, so that is definitely a drawback for them when they go apply for a loan,” Weintraub says.

Matt Stashin, president of Oregon-based Pacific Residential Mortgage, says unmarried females represent roughly 16 percent of his business, whereas single men account for 12 percent. He says his company doesn’t take any special steps to market loans to women, or to separate women out as a group. He says federal regulators would likely frown on that.

“It is a tough topic,” Stashin says. He says it is no secret that women earn less, but that society also has been making progress in closing the gap.

“I mean, is it a coincidence that single women are the second-largest buying group out there after married couples? It goes much more beyond what the scope of our knowledge level is. We are a fan of women here. I can tell you that.”


Bill Lewis was editor of Scotsman Guide Commercial Edition. Victor Whitman is chief reporter for Scotsman Guide Media. Reach him at (800) 297-6061 or

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