As we stand poised in the year 2025, racial disparity continues to be a significant concern in the United States, with deeply rooted issues spanning various sectors including law enforcement, employment, and , mortgage rates. Recent research indicates a pervasive racial disparity in mortgage rates between black and white borrowers, with black women, particularly those in financially vulnerable situations, -on-bet” target=”_blank”> the most affected. This comprehensive blog post delves into the findings of a groundbreaking study led by Dr. Ping Cheng, a finance professor at Florida Atlantic University’s College of , which uses data from multiple U.S. Consumer Finance Surveys to shed light on this issue. The study reveals troubling trends in the mortgage , pointing to a systemic bias that has serious financial implications for black borrowers.
Study Findings
The study, which analyzed data from three waves of the U.S. Survey of Consumer Finance, found that black borrowers pay about 29 basis points more than comparable white borrowers. This groundbreaking research was published in a 2025 issue of The Journal of Real Estate Finance and Economics.
Discrepancies in Rates
Cheng, along with his fellow researchers, Zhenghou Lin, Ph.D., and Yingchun Liu, Ph.D., of California State University, Fullerton, found that the rate disparity mainly affects young black borrowers with lower education levels and those whose income and credit disqualify them from prime lending rates. In the higher rate groups, black women seem to receive more disparate treatment than black men.
Implications of the Disparity
Among women borrowers who fail to qualify for low-rate (prime) mortgages, black women on average are charged 57.36 basis points (or 0.5736 percent) more than their white counterparts. For a typical $250,000, 30-year mortgage at the current prevailing rate of 3.75 percent per year, the rate difference implies an extra $82.86 per month in mortgage payment for the black women borrowers. If this extra monthly payment was placed in a savings or investment account earning a modest 2 percent per year, the balance would reach $40,825 when the loan is paid off at the end of 30 years. This is the amount of wealth that black women borrowers lose compared to their white counterparts.
Unresolved Questions
Despite controlling for variables like similar mortgage product, income level, education level, and shopping behavior, black borrowers still end up paying a higher rate on average. Empirical studies running statistical models can’t answer the question of why such discrepancies exist. However, the risk perception for lower-income black women appears worse than that for white borrowers with comparable income and credit quality. the study can suggest correlations, it can’t definitively conclude that racial discrimination is the cause of these disparities.
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