An article by Federal Reserve staff in the Summer edition of the Federal Reserve Bulletin takes a step in the direction of deepening our understanding. It notes that a major reason that African-Americans and Hispanics obtain higher-priced loans more frequently than whites is that they more frequently obtain loans from mortgage lenders that concentrate their business on originating higher-priced loans.
This partial explanation for the differences in the incidence of higher-priced borrowing, however, begs for its own explanation: Why is there a racial and ethnic difference in the tendency of borrowers to obtain loans from lenders that concentrate on higher-priced lending? Qualitative and quantitative research on such questions will be critical to understanding racial and ethnic differences in lending outcomes.