Peter Muller—Getty Images/Cultura RF
By Christine Giordano /
September 8, 2016

Women pay more for mortgages than men, but that doesn’t mean that they’re a higher risk when it comes to missing mortgage payments. In fact, a new study from the Urban Institute says that women actually are less likely to miss a payment, compared to men.

The recent study looked at all types of borrowers, including single men, single women and couples. They compared data from 13 million women and 17 million men across a vast range of socioeconomic factors. They found that “if a male-only (most likely a single man) borrower has a 6% probability of default, a female-only (most likely a single woman) borrower with the same characteristics would be expected to default at a 5.8% rate,” according to the study. That means women are .2% better at not missing payments.

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

The two basic reasons why women have higher interest rates is because they have more subprime loans, and their credit profiles aren’t as good. When anyone applies for a loan, the lender looks at a series of predictors to determine how likely that person is to default. And because default risk and mortgage rates go hand-in-hand, experts at the Urban Institute are saying assessments need to change because they’re not matching up.

“Women’s predictors are lower, which suggests she’s not going to do as well,” the Urban Institute said. But those predictors are wrong, the institute continues.

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“They’re not predicting accurately,” Pardo said. “Women do better than their characteristics say they should do. And, in fact, they perform better than men.”

Women borrowers generally have more debt to income, which affects their credit scores. They also have less income than men income ($68,000 versus $95,000 for men.) Bundle these things together, and it means they typically must pay higher interest rates for men: 5.48% versus 5.41%. Moreover, women have a higher denial rate. It puts them at a greater disadvantage.

“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 said.

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Using FICO scores might be more accurate and better at predicting actual performance, according to Pardo.

There are many types of debt a person can carry, and a credit score considers just how much debt you have compared to your credit limits.

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