Hispanics, Blacks said to pay more for mortgage
Sept. 9, 2006
WASHINGTON - Black and Hispanic home buyers pay more for their mortgages than do
Whites, according to a Federal Reserve report released Friday.
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 last year, more than double the 20.3 percent reported in 2004.
In contrast, only 17.2 percent of Whites paid higher interest on their home
mortgages last year. However, that was up considerably from 2004's 8.7 percent.
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.
A number of factors were cited for this overall increase. Mortgages rates in
general were rising and rates for popular adjustable-rate mortgages in
particular moved higher.
Some borrowers stretching to buy a home opted for creative financing, such as
higher-priced piggyback loans. The use of piggyback loans shot up more than 57
percent in 2005 from the prior year, the Fed said.
"Indeed, the increase in the number of higher-priced piggyback loans in 2005
accounted for more than half of the increase in the number of all higher-priced
loans," the report said.
The report also said that Black borrowers applying for mortgages were more
likely to be turned down than Hispanics and Whites.
The Fed's report is based on information from 8,848 financial institutions.