Mortgage Interest Rates
Why is this important?
The Home Mortgage Disclosure Act requires most lending institutions to disclose information on mortgages, including the interest rate of the approved loan and demographics of the recipient. This data can help determine if lending institutions are meeting the community’s housing needs and reveal if wealth-building from homeownership is equitable [i]. The price of mortgage credit, or the interest rate charged to borrowers, can be a barrier to homeownership through increased payments. Minority homeownership has historically lagged behind that of white households, and higher mortgage interest rates charged to minority homebuyers are an additional barrier to owning a home. Since owning a home is the most common way US households build wealth, expensive access to credit reduces not only homeownership opportunity, but wealth creation over time. Higher interest rates may be indicative of discriminatory lending practices and high-risk loan products that have a greater risk of foreclosure [ii].
[i] “Home Mortgage Disclosure Act.” National Neighborhood Indicators Partnership. 2017. Web 28 June 2017. <http://www.neighborhoodindicators.org/data-source/4>.
[ii] Bayer, Patrick, Fernando Ferreira, Stephen L. Ross. “What Drives Racial and Ethnic Differences in High Cost Mortgages? The Role of High Risk Lenders.” National Bureau of Economic Research. (2016).