Woman are Receiving Subprime Mortgages at Increased Rates

Since the early twentieth century, the demographics of the home mortgage industry have greatly changed.

According to the National Association of Realtors, in 2006 1 in 5 home buyers were single women, with single women purchasing new homes in much greater numbers than single men.

This change in the demographics of homeowners might be attributed to a psychological urge of women to begin nesting at an earlier age than men and an increase in money earning potential. Today, women are also much more likely to have received a college education and in the workplace, women are slowly closing the gender pay gap.

While single women, and to a lesser extent single men, do make up a significant chunk of new home buyers, married couples still make up the majority of new home purchases. Currently the National Association of Realtors reports that about 60% of new home purchases are by married couples, but this percent has decreased slightly over the last 40 years. However, there has still been a significant increase of single females purchasing a home.

With the increase in women home buyers, there has also been an increase in less than reputable lending practices. In fact in a survey conducted by the Consumer Federation of America in 2006, it was found that women, who make up about a third of all borrowers, have received about 40% of all subprime mortgages. A subprime mortgage is a mortgage that is typically offered to those with poor credit who are deemed as a risk to the lender. The rate will typically be well above the typical market value and this is intended to help contract the risk presented by the borrower. This finding helps to highlight the importance of shopping around for your new mortgage and having a good understanding of the typical mortgage rates.

While women have been purchasing homes in much greater numbers, new home purchases by African Americans have actually significantly declined over the last twenty years.