Urban Institute study proves it’s high time to level the playing field
The Urban Institute’s Housing Finance Policy Center just released a new study proving what we already know to be true: women are better at paying their mortgages than men.
This is simply a “just in case” we need more proof that women are more financially responsible.
In order to drive the point home, the Urban Institute conducted a study using public data filed under the Home Mortgage Disclosure Act, the federal law that requires all but the smallest lenders to report annually, and CoreLogic, a provider of consumer, financial and property information, analytics and services.
From 2011 to 2014, female-only borrowers carried a FICO score of 741, versus male-only FICOs around 739.
This is true even though women earn an annual income of $70,160 and men earn an annual income of $97,670.
So while men make much more money each year on average, women were still better able to keep up with their credit scores (curse you, Wage Disparity, you will not defeat our financial superiority).
Also working against women were the costs and interest of the average loan (more curses unto your originations!).
While women had a 4.9% priced loan, men’s loans were 4.6% on average. This is despite the fact that, for women, the loan size was only $171,240 versus $204,890 for men.
Then this must mean that men are being able to save up and put more money down on their loan to get it at a lower cost, right? Actually, probably not. Women borrowers have a loan-to-value of 75.07% versus 77.63% for male borrowers.
Of course, this is only taking single women into account, and leaves out the countless women that, while their husband may be the main borrower on the loan, or contribute half of the income, the woman is who remembers to pay the mortgage payments when he forgets. Every month. Without fail.
Ok, but setting aside my personal bias, for now, what this study shows us is that while women make less than men on average, they are more responsible with the money they do have.
In fact, a recent study from RealtyTrac shows that women are facing a widening gender gap as they buy lower-priced homes and therefore receive less of a return.
“Women earn less than men on average, 19% less in 2015 according to the Bureau of Labor Statistics, giving them less purchasing power when it comes to buying a home,” RealtyTrac senior vice president Daren Blomquist said.
And yet, despite the widening wage gap, they are still able to save up for a home. Homes where men are the borrower with a woman co-borrower make up 40.5% of mortgages extended over the 11-year period, according to Urban Institute’s study. Single male-only borrowers make up 28.9% of the mortgages while female-only borrowers make up 21.5% of the total. A female borrower and male co-borrower make up about 7% of the total. Borrowers and co-borrowers of the same sex make up about 1% each for two male and two female borrowers.
Female-only borrowers have, on average, slightly weaker credit characteristics than male-only borrowers but default less, the study states. This indicates that women perform better given their credit characteristics.
Controlling for all other variables, the study found that women clearly perform better than their male counterparts.
And yet, women still get denied for mortgages more often than men.
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(Source: Urban Institute, HMDA data, CoreLogic)
Hey, if that hasn’t stopped us so far, don’t think it’s going to anytime soon, but maybe it is time to take a closer look at the mortgage lending standards.
When it comes to fair lending, shouldn’t the buck stop at gender discrimination? No?