87% of Mortgage Lenders Overcharged in 2025

AKA, 87% of 2025 Home Buyers Overpaid on Their Mortgage — And Most Never Knew It
By Shawn Yu | Shawn Realty | Portland, Oregon

Good afternoon. I’m Shawn, the realtor guy from Portland, Oregon.

9 Out of every 10 home buyers in 2025 overpaid on their mortgage rate. That’s not my opinion — that’s what a recent Bankrate report found. The average overpayment? $3,343 more per year. That’s almost $280 a month. Over the life of a 30-year loan, it adds up to roughly $78,000–$100,000+ that never had to leave the buyer’s pocket.

In Oregon the picture is even worse in some markets. Corvallis topped the list for the highest overpayments in the state. Here in the Portland area (zip 97229 and surrounding), the average monthly overpayment was closer to $398. Lifetime cost? Over $118,000.

I wanted to know why this keeps happening — because as real estate agents we work hard to connect buyers with lenders who will actually save them money and still close on time. After digging into it (and talking with true mortgage brokers), I found some clear answers. And the savings on the table are significant.

Why So Many Buyers Overpay (Even When Their Lender Means Well)

Most buyers — and, honestly, many lenders — simply don’t realize how much the spread (the lender’s profit margin) varies.

Here’s the quick breakdown in basis points (100 basis points = 1%) based on the conversation I had with a local true mortgage broker. My online research supports this as well:

• True mortgage brokers (the ones who do not fund loans themselves) can often deliver loans with a 150–175 basis-point spread. 
• Credit unions and some big banks typically sit around 200 basis points. 
• Certain local “mortgage banks” / non-depository lenders / Retail lenders (the ones with big marketing budgets and high-producing loan officers) commonly charge 250–350 basis points.

That 1%+ difference is enormous.

The Real Cost of a Higher Rate (Opportunity Cost)

Let’s use a realistic Portland-area example: $600,000 purchase price, 5% down, $570,000 loan.

• At 6.0% vs 6.5% → you save about $185 per month. 
• At the Bankrate average overpayment of ~$278/month → the numbers get even bigger.

If you took that monthly savings and invested it at a conservative 7% average annual return:

Monthly Savings	10 Years	20 Years	30 Years
$185	~$32,000	~$96,000	~$226,000
$278	~$48,000	~$120,000+	~$240,000+

Even a smaller, very achievable quarter-point improvement ($66/month on a $500k-ish loan) still grows to roughly $80,000 over 30 years.

That money is leaving your pocket every single month — and most buyers never know it happened.

Mortgage Broker vs. Mortgage Banker — The Term Matters

The phrase “mortgage broker” is used way too loosely.

A true mortgage broker works for a brokerage that does not fund its own loans. Their job is to shop dozens of wholesale lenders and investors to find the best rate + fee combination for your situation and charge fees for their services.

Many companies that call themselves “brokers” are actually mortgage bankers / non-bank lenders. They originate the loan in-house, keep a larger spread, and then sell the loan. Nothing illegal about it — but the pricing is usually higher, so home buyers should be aware of it.

Mortgage Shopping Tip

When you’re interviewing lenders, ask directly:
“Do you fund your own loans, or do you shop multiple wholesale lenders?”

How to Actually Shop (So You Don’t Become the 87%)

1. Start early — before you write an offer. Once you’re under contract in Oregon it is harder to switch lenders (seller approval is often required after offer acceptance).
2. Get Loan Estimates the same day from at least:
   • One true mortgage broker
   • One credit union or bank
   • (Optionally) one non-bank lender
3. Compare rate + total fees, not just the rate. Look at the spread between the note rate and the APR — a big gap usually means higher fees.
4. Prefer paying discount points (or having the seller pay them) to buy the rate down rather than taking a lender credit that raises your rate. A one-time fee is once; a higher rate compounds for decades.
5. Watch for heavy steering. If a realtor, builder, or lender is strongly pushing one specific company, get competing quotes anyway. Co-marketing is legal, but it rarely produces the absolute best rate.

Closing on time and good communication are the baseline. They are not a reason to pay an extra 0.5–1.0% for 30 years.

Check out actual questions you can ask lenders to find yourself the best mortgage here.

Already Bought in 2025 and Think You Overpaid?

Don’t rush into a refinance. Refinancing restarts the 30-year clock and comes with its own costs. 

A simpler, more powerful move for most people:
Start sending an extra $100–$200 to principal every month (or switch to a bi-weekly payment plan). You attack the interest and shorten the loan without the refinance fees.

Bottom Line

Great customer service and on-time closings should be expected. The real difference is whether your lender is taking $50–$400+ per month in their pockets — money that could be growing in your investment account instead of padding someone else’s margin.

Shop multiple lenders the same day. Compare the numbers side-by-side. Your future self (and your retirement account) will thank you.

If you’ve got a story — how much you overpaid, how much you saved, or a lender who actually delivered — I’d love to hear it. Drop a comment or shoot me a message.

Shop smart, Portland.

— Shawn Yu
Shawn Realty
Portland, Oregon