Research from Iowa State University’s Ivy College of Business shows that same-sex couples are almost 75 percent more likely to be denied a loan than heterosexual couples.
The study looked at national mortgage data for 30 million US loans between 1990 to 2015. The researchers also analysed a smaller, more detailed set of data which included the work history and credit score of applicants.
“Policymakers need to guarantee same-sex couples have equal access to credit.”
— Hao Sun
When same-sex couples were approved they endured higher fees and interest rates, despite the fact such increases are reserved for those who pose a greater risk of being unable to pay back the entirety of the loan.
“We found nothing to indicate that’s the case [for same-sex couples]. In fact, our findings weakly suggest same-sex borrowers may perform better,” said co-author of the study Lei Gao in a statement.
Though same-sex borrowers only saw fees increase at an average of 0.2 percent compared to heterosexual borrowers, the research, published in the Proceedings of the National Academy of Sciences journal, said this added up to around $86 million dollars in total.
Protection against discrimination is needed
Despite the Fair Housing and Equal Credit Opportunity disallowing race-, gender-, marital status- or religion-based discrimination, discrimination based on sexual orientation is not protected. But the researchers believe this needs to change if loans are to be fair.
“Policymakers need to guarantee same-sex couples have equal access to credit,” co-author Hua Sun said. “Using our framework, credit monitoring agencies also can take steps to investigate unfair lending practices.”
The issue does not only affect same sex couples
For the study, co-applicants of the same gender were considered as same-sex couples. The researchers revealed that the more borrowers that fell under this bracket there were in an area, the higher the fees rose for the entire neighbourhood.
Sun and Gao, associate and assistant professors of finance at the university, hope the study will raise enough concern for the issue to be investigated.