Women get a raw deal on mortgages in nearly every corner of the country, a new analysis of federal data has found. Compared with single male borrowers, single female borrowers pay higher rates that add up to thousands of dollars in additional costs.
That’s according to research by mortgage startup Own Up, which used Home Mortgage Disclosure Act data to compare mortgage rates paid by single women to those paid by single men applying for loans. Women paid more in every state except Alaska, Own Up found.
The research points to another area where a gender gap places women at an economic disadvantage. The wage gap has been widely reported, along with the reality that women pay more for cars than men.
Despite decades of regulatory efforts to erase discrimination from the housing industry, the “pink tax” extends to mortgages, too, says Patrick Boyaggi, chief executive and founder of Own Up. “Unless it’s totally equitable, where men are getting the same rates as women, it’s not right, and it’s got to change.”
Where women get the worst deals
Many mortgages are made to married couples, but Own Up examined rates paid by single borrowers only. Based on a mortgage amount of $345,000, here’s where women would pay the most:
- Mississippi. The typical female borrower in the state pays an average of 3.47 percent compared with 3.37 percent for men, a gap of 10 basis points that amounts to $7,077 over 30 years.
- Alabama. Women pay an average of 3.44 percent versus 3.36 percent for men, totaling $6,006 over 30 years.
- Ohio. Female borrowers typically pay 3.42 percent compared with 3.34 percent for men, totaling $5,856 over 30 years.
- Florida. Women pay an average of 3.46 percent versus 3.38 percent for men, totaling $5,591 over 30 years.
- New Jersey. Women pay an average of 3.26 percent compared with 3.18 percent for men, totaling $5,515 over 30 years.
Where women get the best deals
And here’s where women pay the least in additional interest costs:
- Alaska. The typical female borrower in the state pays an average of 3.21 percent compared to 3.23 percent for men, a gap of 2 basis points that amounts to $1,656 over 30 years.
- Maine. Women pay an average of 3.37 percent compared with 3.36 percent for men, totaling $564 over 30 years.
- Wyoming. Female borrowers typically pay 3.29 percent versus 3.28 percent for men, totaling $701 over 30 years.
- Montana. Women pay an average of 3.31 percent compared with 3.3 percent for men, totaling $702 over 30 years.
- Oregon. Women pay an average of 3.33 percent compared with 3.31 percent for men, totaling $1,124 over 30 years.
The importance of shopping around
Own Up’s research focused on purchase mortgages, so it’s unclear if women also pay more than men for refinances. However, the fresh findings underscore the importance of comparison shopping, whether the mortgage is for a purchase or a refi.
An earlier study by the Urban Institute likewise concluded that women pay more than men for mortgages to the tune of 7 basis points. That study found a more modest premium for women — only about $150.
“Female-only borrowers pay more for their mortgages, both because they have generally weaker credit characteristics and because a higher percentage of these mortgages have been subprime,” the Urban Institute reported.
Boyaggi came away with a different conclusion. While credit scores are an important factor in determining your mortgage rate, Boyaggi found no evidence that female borrowers faced a disadvantage on that front.
“You just don’t see that female borrowers have significantly different credit scores from male borrowers,” Boyaggi says.
Many female borrowers neglect to shop around for the best deal, Boyaggi says, an oversight that can translate into thousands of dollars of extra costs over the life of a loan.
In addition to getting at least three bids — and, ideally, five mortgage offers — borrowers should actively bargain for a lower rate or reduced closing costs, Boyaggi says.
“Consumers should not only shop for a mortgage, but they should negotiate for better terms,” Boyaggi says.
What you can do
To score the best deal on a mortgage:
- Shop around. Closing costs and rates vary by lender, so get three bids — and more if you can.
- Negotiate. Even after you’ve found the best deal, push for more — a better rate, or concessions on closing costs.
- Understand the breakeven point. That’s the moment at which the savings in monthly payments offset the amount of the closing costs. This refinance calculator can help you decide.
- Don’t chase the lowest rate. Yes, a low rate and paltry payment are good, but make sure those benefits aren’t overwhelmed by closing costs.