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Hard to Start a Home: Banks Discriminate Against LGBTs Applying for Mortgages, Charge Higher Rates
A new LGBT mortgage study has shown that banks discriminate against queer people applying for mortgages. Lenders are significantly more likely to deny same-sex couples a home loan, and to charge them more for it.
Home ownership is of course a leading wealth creation tool for Americans.
Gay couples were 73% more likely to be denied a mortgage than heterosexual couples with the same financial worthiness, as evident in nearly three decades of national data.
LGBT people face the economic costs of homophobia:
- Poverty: 32% of LGBTQ people have incomes less than $24,000. By comparison, 24% of non-LGBTQ people have incomes of less than $24,000. 15% of transgender people have incomes less than $10,000, compared to 4% of the general population living at that income level.
- Unemployment: LGBTQ people, especially trans people, are at high risk for unemployment. 44% of transgender people are unemployed or under-employed.
The study found that in addition to being denied mortgages and access to homeownership, same-sex couples were charged higher interest rates and fees, which collectively adds up to $86 million per year.
“Lenders can justify higher fees if there is greater risk,” says Lei Gao, a finance professor at Iowa State University’s Ivy College of Business and co-author of the study. “We found nothing to indicate that’s the case. In fact, our findings weakly suggest same-sex borrowers may perform better.”
The discrimination faced in accessing financial tools is a double burden to LGBT folks. The community already faces a higher rate of poverty. LGBTs face the same socio-economic challenges that other people who share their sex, race, ethnicity, age and disability face. But they also face unique obstacles because of their sexual orientation. LGBT people face a higher risk of being homeless, discrimination in the workplace, harassment at school, and now face higher LGBT mortgage rates.
A single discriminatory decision can create lifelong effects that furthers the wealth gap between LGBT people and heterosexuals.