The research behind what we do
Most people trust the first mortgage rate they’re given. Our research shows that’s exactly how they end up paying too much. Here’s the data behind what we do — and how we know it works.
of borrowers overpaid their mortgage in 2025
in annual avoidable costs for the typical borrower
banks and credit unions in our annual mortgage survey pool
estimated annual overpayment burden since 2022
The Problem
Why most borrowers overpay — and why it’s not their fault
A typical mortgage contract spans 50 pages of technical and legal language. Borrowers must review it within a 48-to-72-hour window before a required rate lock, while simultaneously navigating school districts, inspection reports, and closing timelines. Under that pressure, nearly 90% rely on a rate from their real estate agent’s referral, their current bank, or the first quote they receive.
Those sources offer convenience. They don’t offer competition. Mortgage brokers acting on agent referrals are under no legal obligation under Dodd-Frank to find the lowest available rate. The result, across 3.2 million loan originations analyzed from the 2025 Home Mortgage Disclosure Act dataset, is that 87% of borrowers paid more than the best rate available for their borrower profile — not because competitive pricing didn’t exist, but because the default search process is structured in ways that systematically prevent borrowers from finding it.
The aggregate cost: roughly $11 billion in excess annual payments on 2025 originations alone, or approximately $247 billion over the life of those loans. For the typical borrower, that’s $3,343 in avoidable costs every year and $78,186 over the loan term — roughly 22 cents in excess cost per dollar borrowed.
The hidden homeownership tax is not a fee disclosed at closing. It’s the gap between what borrowers pay and what the market could deliver if competition were allowed to function as intended — extracted one basis point at a time from monthly payments most households have no way to benchmark.
How We Benchmark
The Bankrate mortgage auction
The benchmark for competitive mortgage pricing comes from Bankrate’s real-time mortgage marketplace — a live exchange where lenders and brokers compete simultaneously for individual borrower business.
How the auction works
When a prospective borrower submits a query, they provide key underwriting inputs required to generate a binding offer: FICO band, debt-to-income ratio, household income, property value, and loan amount. Bankrate anonymizes these inputs and presents them to participating lenders — including banks, credit unions, and non-bank originators — who submit competing bids ranked by estimated eight-year loan cost.
The eight-year cost metric — roughly how long the typical homeowner holds a mortgage before selling or refinancing — standardizes pricing by incorporating the full economic cost of the loan: interest rate, discount points, origination charges, lender fees, and other closing costs, into a single comparable figure. This neutralizes the wide range of pricing structures lenders use and allows like-for-like comparison across offers that allocate costs differently over time.
Binding offers, not estimates
Unlike conventional rate surveys or lead generation businesses, offers submitted through the Bankrate platform are binding — conditional only on the accuracy of the borrower’s inputs and verifying underwriting requirements — and are honored by the winning institution at origination. These bids are directly comparable to the terms at which loans are actually closed in the market.
Across a sample of Bankrate winning bids in 2025, 35.7% of borrowers closed at or better than their Bankrate quote — 15.3% at the exact quoted rate and 20.4% below it. Among those who closed higher, 49% had submitted inaccurate profile information that was corrected at underwriting, and the remainder chose to pay fewer discount points post-auction, accepting a higher rate in exchange for lower upfront costs.
External benchmark: the Bankrate Monitor
To account for variability in auction participation and provide an independent check on pricing quality, Bankrate also surveys mortgage rates through the Bankrate Monitor (BRM) National Index — a weekly survey series incorporated into the Federal Reserve Economic Data (FRED) system. Throughout 2025, we surveyed more than 600 banks and credit unions for mortgage rates, with an average of 300+ institutions sampled each week; not every institution is included in every weekly survey. The broader BRM total of 850+ institutions includes banks and credit unions surveyed across all product categories, including deposits. Against this benchmark, Bankrate’s auction consistently outperformed 99–100% of quoted mortgage rates for an average borrower profile between January 2025 and May 2026.
✓ In 2025, Bankrate’s auction delivered rates below 99–100% of surveyed rates across 600+ mortgage banks and credit unions, measured weekly.
The Data
Four independent sources behind our overpayment analysis
To measure the scope and cost of mortgage overpayment at scale, this analysis draws on four distinct data sources. Each contributes a different dimension: market pricing, origination outcomes, household wealth context, and credit profile calibration.
- 1
Bankrate mortgage auction
Real-time binding bids from competing lenders, ranked by eight-year loan cost. Serves as the competitive benchmark against which actual origination outcomes are measured.
- 2
HMDA loan-level data
3.2 million mortgage originations from the 2025 Home Mortgage Disclosure Act dataset, administered by the CFPB and the Federal Financial Institutions Examination Council (FFIEC). Provides actual contracted rates, borrower characteristics, and loan terms.
- 3
Federal Reserve SCF
The Survey of Consumer Finances provides household wealth and income context, enabling analysis of how overpayment affects wealth accumulation across the income distribution.
- 4
Fannie Mae & Freddie Mac
Loan-level datasets from both GSEs supply FICO score distributions and underwriting attributes used to calibrate credit profile matching across conventional, FHA, and VA borrowers.
The Methodology
How we measure overpayment
Our overpayment analysis compares the rates borrowers actually received at origination against the competitive offers available to them at the time through Bankrate’s real-time mortgage marketplace.
To ensure an apples-to-apples comparison, each loan in our dataset is matched to Bankrate auction bids for a borrower with a similar credit and financial profile — controlling for credit score, debt-to-income ratio, loan size, loan type, and several other underwriting characteristics. This means we’re not comparing averages to averages. We’re asking: given exactly who this borrower is, what was the best rate they could have gotten?
Rather than a simple yes/no classification, the model assigns each borrower a continuous probability of overpayment, accounting for the fact that market rates vary month to month and that some borrower characteristics must be estimated from related datasets. Costs are measured over an eight-year horizon and include not just interest but fees, points, and other closing costs, so rate-shopping tricks like buying down the rate are properly accounted for.
Sensitivity testing across alternative specifications consistently produces an overpayment rate above 83%, confirming the core finding is not driven by any single methodological assumption.
✓ The full technical methodology is available in our published research: Fellowes & O’Connor, “The Hidden Homeownership Tax,” Bankrate Research, 2026.
What This Means for You
Translating overpayment into real savings
Annual and lifetime savings
The $3,343 in annual savings available through competitive auction pricing is derived from the probability-weighted expected annual excess cost across the 2025 HMDA cohort — the average gap between what borrowers paid and what Bankrate’s benchmark delivered for an equivalent risk profile. Over the eight-year expected holding period, that compounds to approximately $27,000. Over a 30-year term, the probability-weighted lifetime overpayment reaches $78,186, or roughly 22 cents per dollar borrowed.
Borrowing capacity
The $3,343 in annual savings translates to approximately $47,000 in additional mortgage borrowing capacity at prevailing 2025 rates — enough, in many markets, to move a household from renting to owning or into a meaningfully different home.
Retirement impact
Redirected into a diversified equity portfolio at historical average returns over a 30-year loan term, the same monthly savings of approximately $279 compounds to roughly $341,000 — more than three times the Federal Reserve’s estimate of the median American household’s total retirement savings.
Claims & Sources
Every claim on this page, sourced
We hold every public-facing claim to the same standard we hold our rate data: traceable, specific, and honest about what it does and doesn’t cover.
| Claim | As stated |
|---|---|
| 87%Overpayment rate | 87% of borrowers paid more than the best available rate for their borrower profile in 2025. Source: Fellowes & O'Connor, 'The Hidden Homeownership Tax,' Bankrate Research 2026. Based on 2025 HMDA dataset (CFPB). Period: 2025 loan originations Scope / limitations: Probabilistic model matched on credit score, DTI, loan size, type, and state. Sensitivity floor: 83% across alternative specifications. |
| $3,343Annual avoidable cost | The typical borrower pays $3,343 in avoidable costs every year. Source: HHT study. Probability-weighted expected annual excess cost vs. Bankrate auction benchmark, 2025 HMDA cohort. Period: 2025 loan originations Scope / limitations: 8-year cost basis. Average across all credit profiles and loan amounts in HMDA dataset. Individual costs vary. |
| $65BAnnual overpayment burden | An estimated $65 billion in annual overpayment burden has accumulated since 2022. Source: HHT study. Aggregate of probability-weighted excess costs across U.S. mortgage originations 2022–2025. Period: 2022–2025 Scope / limitations: Aggregate estimate. Assumes consistent methodology and market conditions across years. Not a cumulative total — annual rate. |
| $11BExcess annual payments | Roughly $11 billion in excess annual payments on 2025 originations alone. Source: HHT study. 2025 HMDA cohort, 3.2 million originations. Period: 2025 loan originations Scope / limitations: Annual payment basis. Lifetime equivalent is ~$247B across the same cohort over 30-year terms. |
| 99.75%Beat rate | In 2025, Bankrate's top offer outperformed 99.75% of offers by 600+ banks and credit unions surveyed. Source: Bankrate click-through data + BRM weekly surveys Period: Jan–Dec 2025 Scope / limitations: Offers on Bankrate for 30-yr fixed purchase · vs 300+ lenders surveyed weekly, and 600+ annually on a 320k loan and 720 FICO. |
| $73,397Average savings | During 2025, Bankrate's average rate saved its consumers $73,397 on their expected 30-year mortgage cost. Source: Bankrate user click-through data + Freddie Mac PMMS Period: Jan–Dec 2025 Scope / limitations: Not actual realized savings — modeled projection over 30-year term. Fees and points excluded. |
| 600+Institutions surveyed | Bankrate surveys 600+ banks and credit unions for mortgage rates. Source: Bankrate Monitor (BRM) National Index Period: 2025, ongoing Scope / limitations: Annual pool. Weekly comparison basis is 300+. Total BRM including deposit-only is 850+. |
| $47KBorrowing capacity | $3,343 in annual savings translates to approximately $47,000 in additional mortgage borrowing capacity. Source: Derived. $3,343/yr annualized at prevailing 2025 30-yr fixed rates. Period: 2025 Scope / limitations: Illustrative calculation. Actual capacity depends on lender, credit profile, DTI, and prevailing rates at time of application. |
| $341KRetirement impact | Redirected into a diversified equity portfolio, the monthly savings compounds to ~$341,000 over 30 years. Source: Derived. ~$279/mo invested at historical average equity returns over 30-year term. Period: Illustrative / 30-yr projection Scope / limitations: Illustrative only. Past investment returns do not guarantee future results. Individual outcomes vary based on asset allocation, timing, and fees. |
Claims sourced from the HHT study reflect findings as of the study publication date. Past performance is not indicative of future results. Bankrate is not a lender.
Public DataBankrate rate data is available through the Federal Reserve’s FRED platform
While institution-level rate data is available exclusively to Bankrate members, we share national averages with the Federal Reserve. The Bankrate Monitor (BRM) National Index and Bankrate Consumer Polls are hosted by the Federal Reserve Economic Data (FRED®) platform, maintained by the Federal Reserve Bank of St. Louis. Researchers and policymakers can retrieve, graph, and download these series alongside other leading economic indicators.