Women Better Than Men at Paying Mortgages

By Fox Fire Real Estate LLC | Sep 09, 2016
Photo by: Dale H. Martin
DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 09, 2016

Women are less likely than men to miss a mortgage payment, according to a new study from the Urban Institute. Yet, they tend to pay higher interest rates.

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A single male borrower had a 6 percent probability of default while a comparable female-only borrower had an expected default rate of 5.8 percent, the study showed.

“This is the first step in saying the barometer is consistently not accurately predicting whether women are able to pay their mortgages,” says Sheryl Pardo, a spokesperson for the Housing Finance Policy Center at the Urban Institute.

Even though women show a higher tendency to pay their mortgages on time, they tend to pay higher interest rates. Why? The study posits that women tend to get higher interest rates because they comprise a higher percentage of subprime loan borrowers and their credit profiles don’t tend to be as good as men’s.

But the study’s authors argue that lenders need to reassess predictors in determining how likely a person is to default on the loan.

Women’s predictors are lower, which suggests she’s not going to do as well, but lenders aren’t “predicting accurately,” Pardo told Credit.com. “Women do better than their characteristics say they should do. And, in fact, they perform better than men.”

Women tend to pay higher interest rates than men – 5.48 percent versus 5.41 percent, the study found. Women borrowers tend to have more debt to income, which lowers credit scores, and they tend to have less income than men ($68,000 versus $95,000 for men).

“Given that more than one-third of female-only borrowers are minorities and almost half of them live in low-income communities, we need to develop more robust and accurate measures of risk to ensure that we aren’t denying mortgages to women who are fully able to make good on their payments,” Pardo says.

Source: “Women Are Better Than Men at Paying Their Mortgages,” Credit.com (Sept. 8, 2016)

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