Differences in subprime loan pricing across races and neighborhoods

Andra C. Ghent, Rubén Hernández-Murillo, Michael T. Owyang

Research output: Contribution to journalArticlepeer-review

37 Scopus citations


We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood-level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the differences in subprime mortgage rates in terms of racial and ethnic groups and neighborhood characteristics. We find evidence of adverse pricing for Blacks and Hispanics. The evidence of adverse pricing is strongest for purchase mortgages and mortgages originated by non-depository institutions.

Original languageEnglish (US)
Pages (from-to)199-215
Number of pages17
JournalRegional Science and Urban Economics
StatePublished - Sep 2014


  • Discrimination
  • Fair housing act
  • Loan performance
  • Subprime mortgages

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies


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