Mortgage Prepayment, Race, and Monetary Policy Mortgage Prepayment, Race, and Monetary Policy

By Kristopher Gerardi, Paul Willen, and David Hao Zhang

Black and Hispanic white borrowers pay more than 50 basis points higher interest rates than white borrowers in a large, representative sample of loans insured by Fannie Mae and Freddie Mac. The authors show this disparity is primarily driven by the fact that white borrowers are more likely to exploit periods of falling interest rates by refinancing their mortgages or moving.

up down Key Findings