A new Bankrate study finds 87% of US borrowers overpay
Nearly nine in 10 American mortgage borrowers are likely paying more for their home loan than the competitive market warrants, not because better rates are unavailable, but because most borrowers never find them.
A study released this month by Bankrate estimates that mortgages originated since 2022 cost American households roughly $65 billion in excess interest annually, or approximately $3,343 per household per year.
The research compared actual loan originations filed under the Home Mortgage Disclosure Act (HMDA) with binding mortgage offers available through Bankrate's marketplace, where lenders compete in real time on price alone.
Accounting for 17 borrower-specific risk factors — including down payment, loan size, and debt levels — the analysis found that 87% of borrowers likely accepted a rate above what the competitive market offered for their exact borrower profile.
"The dream of homeownership feels increasingly out of reach for millions of Americans, so it's worth asking whether the problem is the market or the process," said Matt Fellowes, chief executive of Bankrate and the study's primary author.
"Our research suggests that for most borrowers, competitive rates exist; borrowers just never see them. When lenders compete for a borrower's business, the savings are meaningful and immediate: $279 a month on average, an amount that puts homeownership out of reach for many borrowers."
The cumulative toll is significant. Bankrate estimates that the typical overpaying borrower surrenders roughly $78,186 in excess interest over the life of a 30-year loan. That's more than the median American household's total retirement savings, the company noted.
Who overpays and why it isn't who you'd expect
The study's findings challenge conventional assumptions about mortgage pricing risk. Conventional borrowers — generally the most creditworthy — overpay 89% of the time, carrying lifetime excess costs equal to 23% of their loan balance.
That rate exceeds both Federal Housing Administration (FHA) borrowers at 83% and Department of Veterans Affairs (VA) borrowers at 81%, a gap Bankrate attributes to the consumer protections embedded in government-backed programs that constrain lender pricing discretion in ways the conventional market does not.
Borrowers in the second-lowest debt-to-income (DTI) quartile post the highest overpayment rate in the entire dataset at 92%.
Geographically, overpayment rates are highest in Pennsylvania (90.2%), Oregon (90.1%), and New Hampshire (89.8%).
The case for shopping and for brokers
David Kakish, a mortgage broker at Anchor Home Loans, previously told Mortgage Professional America that rising rates made lender pricing differences newly visible to consumers.
"As rates started to rise, the difference between lenders and their pricing structures became more and more apparent," Kakish said.
"I think for the first time in a long time, consumers are understanding the need to shop for a mortgage."
That awareness reinforces the broker channel's structural argument. Wholesale brokers who access multiple lenders are positioned to surface competitive offers that single-lender retail relationships rarely can.
How mortgage brokers compete against retail lenders on pricingis increasingly a numbers conversation — one that Amir Nurani, broker-owner of Left Coast Leaders in California, previously told MPA he makes explicit with clients.
"When you start pointing out to people that they're paying $7,000, $8,000, $12,000, $15,000 to obtain that rate and the fact that they could get that same rate with you without that cost, it becomes very attractive."
Bankrate proposes two market-based remedies: mandatory disclosure of a benchmark rate alongside every mortgage offer — reflecting what similarly qualified borrowers are actually receiving — and a voluntary certification framework for lenders competing in multi-lender marketplaces. Neither measure would require new government programs.
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