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Home arrow Financial News arrow Mortgage News arrow Mortgages are paid more by Hispanics and Blacks
Mortgages are paid more by Hispanics and Blacks Print E-mail
Tuesday, 12 September 2006
WASHINGTON - Black and Hispanic home buyers pay more for their mortgages than do whites, according to a Federal Reserve report released Friday.  Federal Reserve reports that Black and Hispanics pay more for their mortgages.  The Fed’s analysis of 2005 home lending data found that 54.7 percent of black borrowers paid a higher-than-typical interest rate on home mortgages.  That was up sharply from 32.4 percent in 2004.

For Hispanics, 46.1 percent paid more than typical for their mortgages last year — more than double the 20.3 percent reported in 2004.

For all borrowers, there was a “significant increase” in the incidents of higher priced mortgages from 24.6 percent in 2005 compared with 11.5 percent in 2004.

Borrowers stretching to buy a home opted for creative financing, like higher-priced piggyback loans. The use of piggyback loans shot up more than 57 percent in 2005 from the prior year, the Fed said.

Economists and other experts said one should be cautious about drawing any conclusions from the Fed information about discriminatory lending.

Jay Brinkmann, a financial economist at the Mortgage Bankers Association, said the price of a mortgage is based on risk. The rise of high-priced loans in 2005 — the last year of a five-year housing boom — may be related to “borrowers in general having a somewhat higher risk profile on average,” he said. “In a sense, the best credit customers stepped in early” in the housing market boom, he said.

The Fed’s report is based on information from 8,848 financial institutions, which covers about 80 percent of home lending nationwide. The Fed is required by Congress to report annually on home-lending activity.


Edwina Baniqued

 
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