Same-sex borrowers 73 percent more likely to be denied mortgage, study finds

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By Tim Fitzsimons

Gay borrowers are more likely to be denied mortgage loans, and those that do get approved pay higher interest rates and fees, according to a new study from Iowa State University.

Despite being “less risky overall,” same-sex borrowers are 73 percent more likely to be denied when applying for a mortgage loan, according to the report. When they are approved, the study found they have mortgage interest rates that are 0.02 to 0.2 percent higher on average — potentially adding tens of thousands of dollars to their repayments over the lifetime of the loan.

The study, published earlier this week in the journal Proceedings of the National Academy of Sciences, suggests there may be systemic housing discrimination against gay and lesbian borrowers.

“Our investigation on mortgage performance reveals that same-sex applicants are less likely to prepay mortgages and are no more likely to default than their peers, indicating that they are less risky to lenders,” the report states. “Given the absence of evidence that suggests that same-sex status is a reliable signal for loan underperformance, potential disparate lending practices against sexual orientation might exist in the mortgage market.”





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