One of the mortgage industry's biggest pricing paradoxes may be hiding in plain sight: the borrowers best positioned to secure the lowest mortgage rates could also be among the most likely to overpay.
A new study from Bankrate estimates that 87% of Americans who obtained mortgages in 2025 are paying more than necessary for their home loans. But its most surprising finding is that prime borrowers with strong credit profiles and low debt-to-income (DTI) ratios appear more likely to miss the market's most competitive pricing than many borrowers using government-backed loan programs.
According to the analysis, Americans who originated mortgages since 2022 collectively pay an estimated $65 billion in excess interest annually because they did not obtain the most competitive available rates. That works out to roughly $3,343 per household each year, or an estimated $78,186 over the life of a typical 30-year mortgage.
"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 Bankrate CEO Matt Fellowes, who authored the study. "Our research suggests that for most borrowers, competitive rates exist; borrowers just never see them."
The findings reinforce a broader trend emerging across recent consumer mortgage research. Earlier this month, LendingTree reported that while most borrowers compare mortgage offers, nearly half never negotiate with lenders despite the potential to save tens of thousands of dollars over the life of a loan. Other recent studies have similarly found many homeowners delaying refinances or failing to capitalize on lower-cost financing opportunities, suggesting borrower behavior — not just mortgage rates — continues to play a significant role in affordability.
Prime Borrowers Lead In Overpayments
Perhaps the study's biggest surprise is who appears to overpay the most.
According to Bankrate, borrowers with the lowest DTI ratios — typically viewed as among the strongest credit risks — were more likely to pay above-market mortgage rates than borrowers with higher debt burdens. Among borrowers in the lowest DTI quartile (below 33%), 91% were estimated to have overpaid, while those in the second-lowest quartile (33% to 38%) posted the highest overpayment rate in the study at 92%.
The pattern extended to loan products as well.
Conventional borrowers were estimated to overpay 89% of the time, compared with 83% for FHA borrowers and 81% for VA borrowers. Bankrate attributes part of that difference to standardized consumer protections within FHA and VA lending that limit lender pricing discretion, while pricing in the conventional market can vary more widely.
The study also found that higher-middle-income households earning between $100,000 and $200,000 posted the highest overpayment rate of any income segment, despite generally having stronger financial profiles.
Beyond Higher Rates
Bankrate argues that the issue is less about the overall level of mortgage rates than whether borrowers effectively shop for financing.
The company estimates that purchasing borrowers overpay an average of $3,656 annually, while refinance borrowers overpay about $2,462 annually. It also found borrowers under age 35 incur a lifetime "refinance tax" equal to about 14% of their refinanced loan balance, with that figure rising to roughly 20% for borrowers ages 55 to 64.
Geographically, Pennsylvania, Oregon and New Hampshire recorded the highest estimated shares of borrowers paying above-market rates, while New Hampshire, Illinois, New Jersey and Florida posted the highest lifetime overpayment percentages relative to loan balances.
Calls For Greater Transparency
The report proposes two market-based policy changes aimed at improving mortgage pricing transparency.
The first would require lenders to disclose a benchmark rate showing what similarly qualified borrowers are receiving alongside every mortgage offer. The second calls for a voluntary certification program for lenders participating in transparent multi-lender marketplaces where borrowers can compare competing offers.
Bankrate said neither proposal would require new government lending programs.
Bankrate's headline figures are based on comparisons between actual mortgage originations and pricing available through its proprietary marketplace — not every lender operating in the broader mortgage market — so the estimates should be viewed in that context. Still, the report adds to a growing body of research suggesting many consumers continue to leave money on the table by limiting their mortgage shopping or failing to negotiate.
For loan officers, the takeaway isn't simply that borrowers want lower rates. Increasingly, success may depend on demonstrating value through education, transparency, and trust while helping borrowers understand how pricing can vary from one lender to another.
