WASHINGTON—Minorities are far more likely than whites to take out higher-priced loans to buy or refinance a home and are denied loans more often.
The differences can be explained largely—but not fully—by such factors as income, the Federal Reserve said Tuesday.
In an examination of 2004 mortgage data, Fed economists found that the average incidence of higher-priced home-purchase loans was 32.4% among African-Americans, 20.3% among Hispanic whites and 8.7% for non-Hispanic whites.
The Fed also examined more complete data from eight subprime lenders—institutions that make higher-priced loans to borrowers with flawed credit. It found that in some cases the racial differences were fully accounted for, but in others questions remained.
Overall, the researchers found about 2% of the 8,853 lenders studied had a statistically significant difference in lending to black and Hispanic borrowers as compared with whites. They didn’t say what percentage of overall loans, as opposed to lenders, fell into that category.