Do Americans with disabilities pay higher mortgage rates?

Purpose This study aims to investigate whether Americans with disabilities pay higher mortgage interest rates than Americans without disabilities. Design/methodology/approach Using pooled data from the United States 2014 to 2023 Survey of Income and Program Participation (SIPP), ordinary least squares regressions were used to investigate differences in mortgage interest rates between payers with and without disabilities. Findings After controlling for typical credit application variables, types of lenders and borrower demographics, we find no systematic evidence of higher rates for payers with disabilities. However, recipients of Social Security Disability Insurance (SSDI) benefits pay 23 basis points more on 30-year mortgages than homeowners without a disability. Further, this disability penalty increases with the duration of SSDI receipt. By contrast, homeowners receiving Veteran’s Affairs (VA) disability benefits pay 14 basis points less. Research limitations/implications Statistical inference cannot determine why the subset of SSDI-receiving homeowners with a disability pay higher rates. It may indicate an unlawful disparate impact, or due to SSDI-related income caps, it may reflect a risk premium not captured by our proxies for financial health. Conceivably, the higher observed rates may reflect not price discrimination per se , but the inability to refinance when market rates drop. The study’s limitations include the use of proxies for the loan issue date, credit score, loan-to-value ratio and debt-to-income ratio. Originality/value This paper is the first to examine differences in mortgage interest rates by disability status.