A new study from Bankrate has quantified a persistent inefficiency in the U.S. mortgage market: 87% of borrowers who took out home loans since 2022 are paying more than necessary, generating an aggregate excess cost of $65 billion per year. The research, which analyzed actual originations against binding lender offers from Bankrate's marketplace, controls for 17 borrower risk criteria including down payment, loan size, and debt levels.
The per-household toll averages $3,343 annually, or $78,186 over the life of a typical 30-year loan—an amount that exceeds the median American household's total retirement savings, according to the report. Bankrate CEO Matt Fellowes, the study's primary author, said the problem is not a lack of competitive rates but a failure of the shopping process. "When lenders compete for a borrower's business, the savings are meaningful and immediate: $279 a month on average," he noted.
Who Overpays and by How Much
The overpayment pattern cuts across demographics but is most pronounced among the most creditworthy. Borrowers in the lowest debt-to-income quartile overpay 91% of the time, while those in the second-lowest quartile lead at 92%. Conventional mortgage holders overpay 89% of the time, incurring lifetime excess costs equal to 23% of their loan balance—worse than FHA borrowers (83%) or VA borrowers (81%), a gap Bankrate attributes to standardized consumer protections in government-backed programs.
Purchase applicants face the sharpest exposure: more than 90% overpay, losing an estimated $3,656 per year. Refinance borrowers, despite more time to compare offers, still overpay 79% of the time at an average annual cost of $2,462. Income data adds nuance: while 82% of low-income borrowers (earning under $49,000) overpay by $1,472 annually, the highest-middle-income group ($100,000–$200,000) has the worst overpayment share of any bracket, surrendering an estimated 23% of total loan balance to avoidable interest over 30 years.
Affordability Pressures Persist
Affordability conditions remain strained. The Mortgage Bankers Association reported that the national median payment for purchase applicants rose to $2,198 in May, up $46 from April, though still $13 below year-ago levels. The Purchase Applications Payment Index climbed 2.2% to 159.4. For lower-end borrowers (25th percentile), the national payment increased to $1,532 from $1,493. The decline was widespread across racial groups, affecting Black, Hispanic, and White households alike.
Despite rate pressure, application volume has held up. The MBA's weekly survey for the week ending June 19 showed overall volume up 1% seasonally adjusted and 8% above year-ago levels. Refinance applications rose 3% week-over-week and 17% year-over-year. Purchase applications slipped 1% but remained 3% above the prior year. The 30-year fixed rate on conforming loans edged down to 6.59%, while the jumbo equivalent fell more sharply to 6.52%.
Delinquencies and Foreclosure Trends
Borrower strain is also visible in performance data. ICE's May 2026 First Look report found the national delinquency rate rose 15 basis points to 3.50%, with overall delinquencies up 4.5% month over month, partly due to a calendar anomaly. Meanwhile, U.S. Foreclosure Filings Climb 14% Year-Over-Year in May Despite Monthly Dip, signaling persistent distress. The Bankrate study frames the overpayment issue not as a market failure but as an information and access problem, calling for lenders to disclose a benchmark rate alongside any offer and for a voluntary certification framework for transparent multi-lender marketplaces—without new government programs.
As home prices hit records—the median price reached $414,000 in April, per April Home Sales data—and inventory rises 20.8% year over year, the cost of not shopping around becomes even more consequential. The study suggests that for most borrowers, competitive rates exist but remain unseen, a dynamic that exacerbates the broader affordability crisis.
