Canada's Condominium Magazine
“Female mortgage applicants are less likely to have their loans originated than are male mortgage applicants.”
This is the shocking conclusion of a new study done by the Woodstock Institute, a US non-profit research group that advocates for a “just financial system.”
This latest study, carried out in the Chicago area, found that female mortgage applicants are discriminated against, and are much less likely to have their loans “originated,” i.e., approved, than are men. And this holds true, the study shows, across all racial categories, though it is most pronounced for African American women.
The study takes into account the underlying reality in American society that women are financially disadvantaged, compared to men, finding themselves on the wrong side of two very significant gaps.
There is the income gap between men and women. Women earn 77 cents for every dollar earned by men. This income gap has been persistent and is well documented in the United States.
However the “wealth gap” is even wider. The Woodstock study cites consumer finances data analyzed since 2007 showing that single women between 18 and 64 years old have median wealth that is less than half (49 per cent) that of single men, and just 12 per cent of the median wealth of married couples. And things are even worse for women of colour.
Yet three times as many women are heads of households with children as are men. And in separate studies, such as one carried out by Northwestern Mutual, an insurance company, women are shown to be more “conservative” when it comes to managing money than men are. Women, therefore, are more careful with money, and bear a greater share of the responsibility in raising children, yet they are less able to get a mortgage.
The mortgage study, which controlled for loan-to-income ratio and a number of demographic factors, found that whether applying alone or with a co-applicant, women were less likely to be approved for a mortgage than a man.
We would expect to see no significant difference in the origination rates for male-headed joint applications and female-headed joint applications, since the backgrounds of both borrowers on joint applications are considered by mortgage lenders. The fact that there are such large disparities raises troubling questions about potentially discriminatory underwriting.
Spencer Cowan, vice president of research at Woodstock Institute
The study compared the two types of joint applications for mortgages: those headed by women and those headed by men. There the finding was that women applying for mortgages with a male co-applicant were 24 per cent less likely to be approved than the reverse (male-headed joint application). When it came to refinancing an existing mortgage, the situation was even worse: female-headed joint applications were 39 per cent less likely to be approved. And again, for African American women, the reality was worse. A joint application headed by an African American woman was 44 per cent less likely to be approved than one headed by a man.
The study ends with recommendations that more study be carried out, as well as greater enforcement of the fair housing legislation already in place.
As we have no comparable data for Canada, we don’t know whether the situation described in the Woodstock Institute study applies here. There’s little reason to believe it doesn’t, at least to some degree.
Most industry people, including the big banks and Canada Mortgage and Housing Corporation, recommend that any homebuyer get pre-approved for a mortgage before even looking at properties. Independent advisers (not the big banks) also recommend that you shop around online for different mortgages that are available. Brokers, naturally, advise that you use their services. If you feel you’re being treated unfairly by an institutional lender because you’re a woman, one possible recourse would be to go to a broker and ask for a range of quotes. Or simply go elsewhere yourself.