Hidden Mortgage Overpayment
WASHINGTON, DC — A new Bankrate study says a large share of American mortgage borrowers paid more than they needed to in 2025, adding up to what the company calls a hidden homeownership tax. Released in June 2026, the analysis found that 87% of U.S. borrowers overpaid for their mortgages, with the average household paying about $3,343 more in interest each year than the competitive market would have offered.
Bankrate said the overpayment is not limited to first-time buyers. It applies to people refinancing as well, and the company estimated that refinance borrowers overpaid 79% of the time, losing about $2,462 a year. The study framed the issue as widespread, costly and tied to how borrowers shop for loans rather than to a lack of available lower rates.
What The Study Measured
Bankrate defined overpayment as the gap between a borrower’s actual interest rate and the rate available in a competitive market. The company said it compared mortgage originations from 2022 through 2025 with offers made on its own mortgage marketplace, where lenders bid in real time and the winning lender must honor the offer.
To make the comparison, Bankrate said it used 17 factors that can affect mortgage pricing, including down payment size, loan amount, debt levels and loan type. It also used public housing data from Freddie Mac and Ginnie Mae to estimate FICO scores based on common buyer profiles. Bankrate CEO Matt Fellowes, who was the study’s lead author, said the average savings from lender competition was $279 a month.
Who Paid Most
The study found that the overpayment problem was especially common among conventional borrowers, who overpaid 89% of the time in 2025. That was higher than the 83% overpayment rate for Federal Housing Administration borrowers and the 81% rate for Veterans Administration borrowers. Bankrate said conventional borrowers were also the most creditworthy group it studied.
Income did not eliminate the pattern. Bankrate said 82% of low-income borrowers overpaid, while 90% of higher-middle-income households earning $100,000 to $200,000 a year did so. The company estimated that a typical borrower could pay $78,186 extra in interest over a 30-year mortgage, and that excess interest across mortgages originated since 2022 totaled about $65 billion a year.
What Borrowers Can Check
Bankrate and the Consumer Financial Protection Bureau both point borrowers toward shopping around before locking in a loan. The CFPB says shoppers can ask each lender for a loan estimate, and lenders must provide one within three business days. Those estimates can be compared on rates, fees and features such as prepayment penalties that may raise the total cost of a mortgage.
The CFPB also says multiple mortgage credit checks within a 45-day window count as a single inquiry on a credit report, which can make rate shopping less risky for consumers than many expect. Bankrate said refinancing may still be an option for some homeowners, but closing costs and current rates matter, and its study does not offer a blanket recommendation to refinance or wait.
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