The Lazy Explanation is Wrong

Same-sex couples are denied mortgages more frequently than different-sex couples, and, when they do get approved, are charged a higher rate. The lazy explanation is that discrimination must be the reason. This study looked deeper. [bold added]

We identify same-sex and different-sex couples according to the gender of the mortgage applicant and co-applicant. Then, controlling for a rich set of lender, borrower, and loan characteristics, some of which are important in mortgage decisions but were not available in previous research like credit scores, we find that same-sex couples are 8.8 percent more likely to be denied a home mortgage than similar opposite-sex couples and conditional on being approved, are quoted an interest rate that is 0.8 percent higher. We explore heterogeneity by regions, by acceptance of same-sex marriage, and pre- and post-COVID. Interestingly, we also find that same-sex couples default significantly more (53.9%) than similar different-sex couples, which suggests an unobserved characteristic that causes same-sex couples to default more, and could explain a part of observed disparities in mortgage approval, undermining results in previous research.

It's an undisputed principle of lending markets that higher-risk borrowers are charged higher rates and are turned down for loans more frequently. To this humble observer, the fact that same-sex couples are riskier is a more likely explanation for mortgage disparity than bias. (H/T Marginal Revolution)