Seniors Face Greater Barriers to Mortgage Access

Mortgage-application rejections and higher coupon rates are more common among people over 50, research shows.

Recent research reveals an age gap in mortgage access but the outcome is the opposite of what many might expect. Individuals 50 and over had a higher probability of having their mortgage applications rejected than those in the youngest age group, 18-24.

Natee Amornsiripanitch, the researcher and a senior financial economist at the Federal Reserve Bank of Philadelphia, looked at the relationships between applicant age and mortgage application outcomes. He examined confidential Home Mortgage Data Disclosure Act (HMDA) data from 2018 to 2020, which included millions of single-borrower mortgage applications.

“From a policy perspective, as the U.S. population ages and the natural human lifespan increases, it is important to understand how aging affects an individual’s ability to
access credit because many individuals do and will spend a larger portion of their lives as senior citizens” he wrote in his report.

He chose to focus on refinance mortgage applications because the statistical biases between “applicants of different age groups are likely to be less severe among refinance mortgage applications than among home purchase mortgage applications,” he wrote.

Center for Retirement Research at Boston College, in a brief it published in February 2023 as an adaptation of Amornsiripanitch’s independent research, described the correlation between age and rejection as “large and robust.”

The oldest age groups Amornsiripanitch studied were 50-59, 60-69 and 70 and over. He found “ … applications associated with individuals who belong to the three oldest age groups are 2.4%, 3.5%, and 5.5%, respectively, more likely to be rejected than applications associated with individuals who are in the 18 to 24 age group. These estimates show large increases relative to the sample’s unconditional rejection probability of 17.5%. This core result is surprising because older individuals are generally in better financial conditions than younger ones.”

Rejection accelerates in old age

“Rejection probability increases smoothly with age and accelerates in old age,” Amornsiripanitch wrote in his research abstract. This is surprising, he noted, because credit scores and wealth tend to be positively correlated with age. On a bright note, he found the acceleration of rejection was lower for female mortgage applicants.

Amornsiripanitch also observed a positive correlation between borrower age and coupon rate. “It is plausible that, due to higher likelihood of physical or mental fatigue and technology aversion, older borrowers perform a less comprehensive search of potential lenders than younger borrowers,” he wrote, and “cannot provide competing rates for lenders to match.”

Research limitations

Still, Amornsiripanitch made it clear that he doesn’t want to jump to conclusions beyond the scope of his study. For example, the correlations he found between age and mortgage applications “cannot be used to make a statement about whether lenders are actually using age to make lending decisions,” he says. “A rigorous fair lending analysis of individual lenders’ activities would be required to make such statements and is beyond the scope of this paper.”

The results “also cannot be used to make definitive statements about whether the lenders included in this study are behaving legally or illegally with respect to fair lending laws,” he wrote. Nor is he making a statement about whether older individuals should have easier access to credit, he said.

“The paper’s main goal is to present systematic empirical relationships between age and mortgage outcomes without making any welfare or normative statements,” he concluded. “The relationship between age and credit access should be an active area of economic research, especially when aging becomes a more pressing policy concern.”


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