Effect of Neighbourhood Racial Composition on Mortgage Interest Rates

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This Research Insight is the third in a series on understanding inequities in housing finance. In this edition, we look at the research conducted to understand the impact of neighbourhood racial composition on mortgage interest rates for uninsured mortgages.

Our key findings show:

The presence of Indigenous and Black residents had a small effect of increasing mortgage interest rates relative to a forward sortation area (FSA — the first 3 digits of the postal code) without visible minorities.
Mortgage interest rates may not be a primary source of inequality in the housing finance system. Factors like homeownership rate and property value are more important sources.
Further research should explore other factors such as property tax payments and risks of predatory lending for racialized populations.