On average in the United States, do people of different races with similar credit histories pay disparate mortgage costs?
Contrary to the claims of many politicians, journalists, and activists, a 2019 study of mortgage costs by Federal Reserve Board economists Neil Bhutta and Aurel Hizmo found that whites, blacks, Hispanics, and Asians with similar credit histories pay "virtually identical" mortgage costs. The authors note that other studies that found racial disparities only examined interest rates and ignored upfront mortgage fees, which "can add up to thousands of dollars." Bhutta and Hizmo found that black and Hispanic borrowers "tend to choose slightly higher interest rates in return for lower upfront costs," while "Asian borrowers tend to select lower interest rates and pay more" upfront fees. Studies that fail to account for these upfront fees generate "misleading results about the presence of discrimination." Claims of systemic racism in other realms, like income and education, suffer from similar flaws in that they ignore key factors that undercut their claims.