Local home loan market does not discriminate unfairly unlike other markets

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Unlike other overseas markets which may discriminate unfairly according to ethnicity or even education, the local home loan market acts more fairly

By: Hitesh Khan/

A new Northwestern University analysis finds that racial disparities in the United States mortgage market suggest that discrimination in loan denial and cost has not declined much over the previous 30 to 40 years, yet discrimination in the housing market has decreased during the same time period.

The report showed:

  • Black and Hispanic borrowers more likely to be rejected when they apply for a loan; more likely to receive a high-cost mortgage
  • Housing discrimination leads to persistent neighborhood segregation
  • Discrimination in mortgage market makes it more difficult for minority households to build wealth through housing

Northwestern researchers examined how discrimination in housing and mortgage lending against blacks, Latinos and Asians has changed over the last 40 years by performing a meta-analysis of existing studies since the late 1970s to the present.

“We find declines in most forms of discrimination, especially the more extreme forms like falsely claiming an advertised unit is no longer available,” said Lincoln Quillian, lead author of the study and professor of sociology in the Weinberg College of Arts and Sciences at Northwestern. “There is less reduction and considerable persisting discrimination in more subtle differences in treatment between whites and minorities.

“For example, in about 10% audits in which a white and an African-American auditor were sent to apply for the same unit after 2005, the white auditor was recommended more units than the African-American auditor. These trends hold in both the large HUD (Housing and Urban Development)-sponsored housing audits, which others have examined with similar findings to us, and in smaller correspondence studies.”

In the mortgage market the researchers found that racial gaps in loan denial have declined only slightly, and racial gaps in mortgage cost have not declined at all, suggesting persistent racial discrimination. Black and Hispanic borrowers are more likely to be rejected when they apply for a loan and are more likely to receive a high-cost mortgage.

“It was distressing to find no evidence of reduced discrimination in the mortgage market over the last 35 years,” said Quillian, also a faculty fellow with the University’s Institute for Policy Research. “Discrimination in the mortgage market makes it more difficult for minority households to build wealth through housing, contributing to racial wealth gaps. Discrimination in the housing market increases housing insecurity for minority households and contributes to persistent neighborhood segregation. These results help account for why black home ownership has not increased over the last 35 years.”

The reduction in the most exclusionary forms of housing discrimination suggests that in most cases discrimination will not block persistent efforts by black or Hispanic households to move into white or affluent neighborhoods.

“We believe that more subtle forms of discrimination will steer households with weaker neighborhood preferences toward own-race neighborhoods, helping to maintain residential segregation,” Quillian said.

In sum, the researchers say, the results suggest that anti-discrimination enforcement in the housing and mortgage markets should continue, and efforts should be increased to ensure that all home seekers receive equal treatment regardless of their race or ethnic background.

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iCompareLoan’s Home Loan Report (TM)

Mr Paul Ho, chief mortgage officer at iCompareLoan, said “unlike in the US, there is no such unfair discrimination in the local home loan market.”

The local home loan market is largely depend on the borrower’s capacity to pay and less on other factors. Although on the surface it may seem like women are unfairly discriminated, it could actually be that women do not refinance home loan as regularly as men do, thereby end up paying more home loan interest cost.

In the local home loan market, women’s TDSR tends to be less and may impact their ability to refinance

A large percentage of women in Singapore are employed, which means that a significant percentage of them enjoy the freedom to borrow money, obtain loans, or be part of any exclusive loan programs. Such freedom to borrow includes loan programs and financial assistance from independent and private financial organisations – and these are not just limited to credit cards but also extends to mortgage loans, even automotive financial assistance.

Mortgage statistics suggests that women are still lagging behind men when it comes to purchasing property. Statistics show that more than half of property buyers are men, with 57 percent of mortgage applicants being male and the remaining 43 percent of applicants being female.

Mortgage consultants have offered that this statistic could be due to a number of factors, such as the difference between the spending power of single men and single women. Another factor could be that women generally tend to invest more conservatively, as compared to men.

The Ministry of Manpower (MOM) in an occasional paper titled “Singapore’s Adjusted Gender Pay Gap” said that Singapore’s adjusted gender pay gap (GPG) at 6.0% is significantly lower than the unadjusted GPG of 16.3%. With the pay gap between men and women being lower than many other countries including the United States of America and Canada, women should be able to get access to the same quantum of home loans that men are eligible for. Whether you are a men or a women, it is best to speak to a mortgage broker, who can point you to the best home loans in town.

In the local home loan market, whatever gender you are, so long as you have a job and credit record, getting a home loan or whatever loan you want is not really a problem and so should not affect women’s ability to obtain home loans.

Written by Ravi Chandran

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