The Age Gap in Mortgage Access

This paper uses data on millions of single-borrower mortgage applications to study the relationship between applicant age and mortgage application outcomes. Conditional on a rich set of applicant, property, and loan characteristics, mortgage refinance applications submitted by older borrowers are associated with higher rejection probabilities. This pattern holds within lender and across loan types. Rejection probability increases smoothly with age and accelerates in old age. The acceleration is slower for female applicants. Inability to maintain properties may contribute as older applicants are more likely to be rejected for insufficient collateral. Lastly, using the loan-level pricing adjustment identification strategy, I find similar empirical relationships between borrower age and coupon rate on home purchase and refinance mortgages that were sold to Fannie Mae and Freddie Mac. Taken at face value, age appears to be an equally important correlate of mortgage application outcomes as race and ethnicity. Overall, the results suggest that older individuals systematically face higher barriers to mortgage access. Potential explanations are discussed. ∗Email: natee.amornsiripanitch@phil.frb.org. I am indebted to Robert M. Hunt for his continued guidance and support. I thank Xudong An, Hajime Hadeishi, Westra Miller, Ken Benton, Sebastian Doerr, Igor Livshits, Keyoung Lee, Siddhartha Biswas, Kaushik Vasudevan, Kevin Zhao, Lauren Lambie-Hanson, Ken Brevoort, Micah Spector, Kenneth Crenshaw, Jeanne Rentezelas, John Terruso, John Wackes, Yoshi Shimizu, and Stephen Ross for helpful comments and discussions. I also thank participants at various conferences and seminars for their questions and suggestions. This Philadelphia Fed working paper represents preliminary research that is being circulated for discussion purposes. The views expressed in this paper are solely those of the author and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia, the Federal Reserve Board, or the Federal Reserve System. Any errors or omissions are the responsibility of the author. No statements here should be treated as legal or investment advice.