A new study by Bankrate reveals that 87% of American mortgage borrowers are likely overpaying for their home loans as of 2025, creating an annual financial drag of approximately $65 billion. This excess interest costs the typical borrower about $3,343 per household annually, which totals $78,186 over the life of a 30-year loan. The research identifies the issue as an access problem, where competitive rates exist but remain unseen by most borrowers, rather than a failure of the market itself.

The findings highlight that borrowers who purchased mortgages since 2022 could have saved significant amounts had they accessed platforms where lenders compete in real time on price. Bankrate CEO Matt Fellowes, the primary author of the study, noted that when lenders compete for a borrower’s business, the savings are meaningful and immediate, averaging $279 a month. The study emphasizes that the debt used to build wealth through homeownership currently weighs down Americans’ financial outcomes.

The research categorizes the overpayment issue into several key findings, including a wealth paradox where higher-middle-income households are most likely to overpay. It also details a "seniority tax" in the refinance market and a creditworthiness paradox where the most creditworthy borrowers are most likely to overpay.

Key Findings on Overpayment

The study breaks down the scale and demographics of the overpayment issue:

• Scale of the problem: 87% of borrowers likely overpay, costing roughly $11 billion annually on loans taken out in 2025 and $247 billion over the life of those loans. More than 90% of purchasing borrowers likely overpay, losing an estimated $3,656 per year, while refinance borrowers likely overpay 79% of the time, losing $2,462 annually.
• Wealth paradox: 82% of low-income borrowers likely overpay by an estimated $1,472 annually, compared to 90% of higher-middle-income households ($100,000–$200,000). Higher-middle-income borrowers surrender an estimated 23% of their total loan balance to avoidable mortgage costs over 30 years.
• Creditworthiness paradox: 91% of American mortgage holders in the lowest debt-to-income (DTI) quartile (below 33%) overpay. Borrowers in the second-lowest quartile (33% to 38%) post the highest segment rate at 92%.
• Conventional premium: Conventional borrowers overpay 89% of the time, with lifetime excess costs equal to 23% of their loan balance. This exceeds the overpayment rates for Federal Housing Administration (FHA) borrowers (83%) and Veterans Administration (VA) borrowers (81%).

Geographic and Demographic Variations

The study identifies significant geographic disparities in overpayment rates. Borrowers are most likely to overpay in Pennsylvania (90.2%), Oregon (90.1%), and New Hampshire (89.8%). However, the highest lifetime tax percentages—overpayment amounts relative to loan balances—are found in states like New Hampshire (23.0%), Illinois (23.0%), New Jersey (22.9%), and Florida (22.6%).

In the refinance market, the study notes a "seniority tax" where borrowers under 35 carry a lifetime tax equal to 14% of the refinanced loan balance. This figure grows steadily with age, reaching 20% for pre-retirement borrowers aged 55–64.

Methodology

Bankrate measured mortgage overpayments by comparing originations between 2022 and 2025 against offers on its mortgage marketplace. The model accounted for risk using 17 criteria, including down payment, loan size, and debt levels. Since FICO scores are not in the federal Home Mortgage Disclosure Act (HMDA) database, the study used public housing data from Freddie Mac and Ginnie Mae to estimate them. "Overpayment" is defined as the amount a borrower’s actual interest rate exceeded competitive market offers available for their profile, weighted by monthly origination volume.

Senator Chris Murphy introduced the Living Wage For All Act, a bicameral bill designed to raise the federal minimum wage from $7.25 to $25 per hour through a phased rollout. The legislation addresses the gap between stagnant wages and rising living costs by mandating a significant increase in the wage floor over the next decade.

The bill requires large corporate employers to implement a $25 hourly wage by 2032, granting smaller businesses until 2039 to meet the requirement. Additionally, the proposal mandates automatic future increases by tying the federal minimum wage to two-thirds of the national median wage. This mechanism aims to ensure wages keep pace with broader earnings trends.

Legislative Support and Provisions

The Living Wage For All Act has garnered support from several Democratic lawmakers. In the Senate, the bill is co-sponsored by Senator Richard Blumenthal, Andy Kim, and Ron Wyden. Companion legislation was introduced in the House of Representatives by Representatives Delia C. Ramirez, Analilia Mejia, Jesus "Chuy" Garcia, and Lateefah Simon.

Beyond raising the base wage, the legislation seeks to gradually eliminate subminimum wages for tipped workers, workers with disabilities, and youth workers. This provision ensures all workers eventually move toward the same wage floor.

Economic Context and Impact

The federal minimum wage has remained at $7.25 since 2009. According to Murphy’s office, worker productivity has risen by roughly 92% since 1979, while wages have increased by less than 34%. Supporters argue that if the minimum wage had tracked with inflation and productivity since 1968, it would have reached approximately $25 by 2023.

The proposal has drawn support from major labor and civil rights organizations, including One Fair Wage, the NAACP, the Service Employees International Union, and the National Education Association. Critics, however, warn that aggressive wage hikes could lead to reduced hiring, fewer hours, and higher prices, particularly affecting small businesses and lower-skill jobs.