Racial Disparities in the U.S. Mortgage Market

Abstract

We study racial disparities in the US mortgage market. Using new data from Hurtado and Sakong (2024), we present three findings. First, we document access disparities between minority and otherwise-identical White borrowers even within the same bank and with the same loan officer. In contrast, cost disparities are nearly zero. Second, the use of automated underwriting algorithms is associated with smaller access disparities but slightly larger cost disparities. Third, individual factors such as loan officers' race and whether borrowers' race is observed at application do not seem to matter much.