This study examines the effect of gender on the choice of adjustable- versus fixed-rate mortgages among mortgage applicants in the United States. While adjustable-rate mortgages (ARMs) are initially cheaper, they expose the borrower to interest rate risk. Using linear probability models applied to US lender data for 2004–6, the study finds that the propensity to apply for an ARM among higher-income applicants is lower for women by 3.7–8.4 percentage points or 12–42 percent. Results are robust to the inclusion of education, financial knowledge, and economic determinants of mortgage choice. Results are consistent with past findings of women being more risk averse than men in financial behaviors. Findings of this US-based study are relevant for other countries, as ARMs of varying lengths are widely prevalent outside the US.
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