Women Don’t Shop Enough for Home Loans

New research shows that women get less favorable mortgage rates than men, but not because of gender bias. The reason, according to a new report published in the Journal of Real Estate Finance and Economics, is because instead of shopping around for better loans, women tend to follow the recommendations of friends. The report set out to explain why women were 32 percent more likely to get a subprime mortgage than men in a 2006 study. The finding was not discrimination because of gender or even income disparities, but because women are more likely to listen to friends’ suggestions, while men are more likely to scout for the best deal, according to a team of researchers led by Florida Atlantic University’s Ping Cheng. “Our empirical test confirms that search effort is rewarded in (the) marketplace, and suggests that gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills,” the report concludes. Daily Finance columnist Laura Rowley is not at all surprised by this. “Mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision,” says Rowley, “but this is one area where you don’t want to get by with a little help from your friends.” Instead, she recommends, call two mortgage brokers and a direct lender — preferably a local small or midsize bank — and request a written estimate from each based on the desired price and down payment on the home. | Read More