The US mortgage market has a transparency problem, and it is costing homeowners tens of billions of dollars every year, with those better off bearing much of the load.
New research from Bankrate finds that 87% of American mortgage borrowers are likely paying more than necessary on their home loans, with the aggregate excess running to $65 billion annually across mortgages originated since 2022.
The study puts the per-household toll at roughly $3,343 per year, or $78,186 over the life of a typical 30-year loan, a figure that exceeds the median American household's total retirement savings.
"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, primary author of the study. "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 overpayment problem cuts across every demographic and credit profile.
Bankrate's analysis found that the most creditworthy applicants are, counterintuitively, the most likely to overpay. Of those in the lowest debt-to-income quartile, 91% are paying excess interest as of 2025, while borrowers in the second-lowest quartile post the highest rate in the entire dataset at 92%.
Conventional mortgage holders overpay 89% of the time, carrying lifetime excess costs equal to 23% of their loan balance. That is a worse outcome than FHA borrowers, who overpay 83% of the time, and VA borrowers at 81%, a gap Bankrate attributes to the standardized consumer protections embedded in government-backed programs that constrain lender pricing discretion.
Purchase applicants face the sharpest exposure. More than 90% of those buying homes are likely overpaying, losing an estimated $3,656 per year. Refinance borrowers, despite having more time to compare offers, still overpay 79% of the time at an average annual cost of $2,462.
The income breakdown adds another layer of complexity. While 82% of low-income borrowers, those earning under $49,000, overpay by an estimated $1,472 annually, the highest-middle-income group, households earning between $100,000 and $200,000, has the worst overpayment share of any income bracket, surrendering an estimated 23% of their total loan balance to avoidable interest costs over 30 years.
Bankrate's methodology compared actual originations between 2022 and 2025 against binding lender offers submitted through its marketplace, controlling for 17 borrower risk criteria including down payment, loan size, debt levels, and loan type.
The report frames the issue not as a market failure but as an information and access problem. It calls for lenders to be required to disclose a benchmark rate for similarly qualified borrowers alongside any mortgage offer, alongside a voluntary certification framework for lenders that operate in transparent, multi-lender marketplaces. Neither proposal involves new government programs.
Against that backdrop, affordability pressures show no sign of easing. Data from the Mortgage Bankers Association found that the national median payment applied for by purchase applicants climbed to $2,198 in May, up $46 from $2,152 in April, though still $13 below the level recorded a year earlier.
"Affordability conditions weakened in May, as rising mortgage rates, combined with increasing loan application amounts, drove mortgage payments higher," said Edward Seiler, MBA's Associate Vice President of Housing Economics and Executive Director of the Research Institute for Housing America. "The decrease in affordability was widespread, with conditions declining in 33 states. While affordability conditions remain improved compared to a year ago, the monthly increase underscores how sensitive prospective homebuyers remain to changes in interest rates and home prices."
The MBA's Purchase Applications Payment Index rose 2.2% to 159.4 in May from 156.0 in April. For borrowers at the lower end of the market, the 25th percentile, the national mortgage payment increased to $1,532 from $1,493 in April. The affordability decline was felt across racial groups, with the index rising for Black, Hispanic, and White households alike.
Demand, however, has not collapsed. The MBA's weekly applications survey for the week ending June 19 showed overall mortgage application volume up 1% on a seasonally adjusted basis, sitting 8% above year-ago levels. Refinance applications rose 3% week-over-week and were 17% higher than the same period in 2025. Purchase applications slipped 1% on a seasonally adjusted basis but remained 3% above year-ago levels.
"Mortgage rates changed little over the course of last week, despite the more hawkish tone from the FOMC at its June meeting," said Mike Fratantoni, MBA's SVP and Chief Economist. "Purchase application volume edged slightly lower, while refinance activity posted modest gains. Despite the elevated mortgage rates and overall economic uncertainty, mortgage application volume is running 8 percent above year-ago levels."
The 30-year fixed rate on conforming loan balances edged down to 6.59% from 6.60%, while the jumbo equivalent fell more sharply to 6.52% from 6.62%. The 15-year fixed held at 6.02% and the 5/1 ARM dropped to 5.68% from 5.86%.
The strain on borrowers is also showing up in performance data. ICE's May 2026 First Look at mortgage performance trends found the national delinquency rate rose 15 basis points to 3.50%, with overall delinquencies up 4.5% month over month. The company attributed most of the move to a calendar anomaly, with May ending on a Sunday causing many payments to be processed the following business day.
"While the headline increase in delinquencies may draw attention, the underlying performance picture is stable as delinquencies remain below January 2020 levels," said Andy Walden, Head of Mortgage and Housing Market Research at ICE. "The rise in early-stage delinquencies and the month-over-month decline in cures were largely driven by the Sunday month-end, which causes many mortgage payments to be processed the following business day. The more important trend to watch remains the continued growth in serious delinquencies and active foreclosures, particularly among FHA loans."
Serious delinquencies, loans 90 or more days past due but not yet in foreclosure, held steady from April at 577,000, though that figure is up 111,000 from a year ago, the largest annual increase since 2020.
Active foreclosure inventory reached 280,000 loans, up 34% on an annual basis and the highest level in six years, even as the foreclosure rate remains below pre-pandemic levels. Foreclosure starts fell 9% from April but remain 19% above year-ago levels.
The number of loans either seriously delinquent or in active foreclosure increased by 185,000 from a year ago, the largest year-over-year rise since the pandemic-era unemployment spike in 2020. Cure activity also softened, with loans exiting serious delinquency down 6% month over month, with FHA cures continuing to lag the broader market.
"Overall mortgage performance remains healthy, yet the level of serious delinquencies and active foreclosures highlights the importance of reaching borrowers early," said Bob Hart, President of Mortgage Technology at ICE. "As loss mitigation volumes increase, servicers need technology that helps them quickly connect with homeowners experiencing financial hardship, streamline workout decisions and support consistent execution of workout plans from first contact through resolution."
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