Same-sex couples looking to buy a home face a much harder time getting a mortgage than straight couples.
A new study, looking at mortgage data from 1990 to 2015 finds that gay couples were 73% more likely to be denied in their mortgage applications than heterosexuals. And those who did get approved often faced higher rates.
On average, gay borrowers paid an extra 0.2% in interest and fees, adding up to an extra $86 million per year. Same-sex couples, however, do not present a higher default risk, said study authors Hua Sun and Lei Gao.
“Lenders can justify higher fees, if there is greater risk,” Gao said. “We found nothing to indicate that’s the case. In fact, our findings weakly suggest same-sex borrowers may perform better.”
Applicants often aren't asked about their sexual orientation, but the researchers say even the perception of applicants being gay can hurt their chances.
Lenders are barred by the Fair Housing and Equal Credit Opportunity acts from discriminating against applicants on the basis of race, gender, marital status or religion, but sexual orientation is not specifically cited as a prohibited area.
Gao and Sun hope to change that.
“Policymakers need to guarantee same-sex couples have equal access to credit,” Sun said. “Using our framework, credit monitoring agencies also can take steps to investigate unfair lending practices.”