New Study Finds Age-Related Mortgage Approval Rate Discrepancy
Are you saving up to buy a house? The older you get, the less likely you’ll be approved for a mortgage, according to a new study. Researchers at the Federal Reserve Bank of New York determined that the approval rate for mortgage applications decreases steadily with age.
The study, published in February 2021, analyzed data on mortgage applications from 2009 to 2019. It found that approval rates for people over the age of 45 were significantly lower than those of younger applicants. Specifically, approval rates for those 65 and older were 17.6% lower than approval rates for applicants between the ages of 25 and 44.
The researchers found that age-related approval rate discrepancies held true even after controlling for other factors, such as credit score, income, and loan amount. This suggests that older adults are being denied mortgages for reasons other than their financial or creditworthiness.
The New York Fed researchers speculated that one potential explanation for the age-related discrepancy in mortgage approval rates might be age discrimination. “Mortgage lenders may be reluctant to lend to older borrowers due to the perception that they may not live long enough to pay back the loan,” they wrote.
The study authors noted that the age-related discrepancy in mortgage approval rates could be indicative of financial insecurity among older people, as well as a lack of awareness of the various types of mortgage products available.
The findings of the study should be of concern to those looking to buy a home in the later years of adulthood. It is important for older adults to understand the mortgage process and their options for obtaining a loan. Additionally, it is important for financial institutions to ensure that their mortgage approval process is fair and equitable for all ages.
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