Older U.S. homeowners are increasingly paying a hidden premium when they refinance their mortgages, which a new analysis calls the “seniority tax.”
Borrowers aged 55 and older are overpaying by almost $2,400 per year on mortgage refinancing, adding up to more than $52,000 on an average 30-year loan, according to a new Bankrate report released on Aug. 5.
On average, older borrowers can pay up to 20 percent more in interest over the amortization period than borrowers under 35.
But overpayments may have more to do with high-pressure sales tactics than creditworthiness, said Linda Bell, Bankrate’s home lending expert.
“The older you are, the more likely you are to overpay,” Bell said in a statement to The Epoch Times.
“Our watchdog reporting found that aggressive sales tactics, combined with a reluctance to shop around and an aversion to technology, can leave many middle-aged and older borrowers paying more than they should.”
The latest findings build on Bankrate’s recent Hidden Homeownership Tax report, which found that senior borrowers were more likely than younger borrowers to refinance into higher-cost loans that their financial profiles did not support.
The overpayment rate for borrowers aged 55 and older is 81 percent. Overall, 87 percent of U.S. mortgage borrowers overpay, costing the economy about $65 billion per year.
Refinancing activity has been robust on a periodic basis over the past six years.
At the onset of the COVID-19 pandemic, when the Federal Reserve slashed interest rates to nearly 0 percent, homeowners sought lower mortgage rates.
After the 30-year fixed mortgage peaked at 7.79 percent in October 2023, mortgage borrowers submitted refinance applications at high levels. But the recent reacceleration in interest rates has put the brakes on these efforts.
Refinancing volumes declined by 9 percent last week from the same time a year ago, according to the Mortgage Bankers Association.
“Application volume for both refinance and purchase loans declined for the week, and are now running behind last year’s pace, indicating that higher mortgage rates have weakened overall demand,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, said in an Aug. 5 news release.
Applicants have suffered elevated rejection rates over the past few years, although the figure has slowed in the first half of 2026.
The overall refinance application rejection rate was 7.2 percent in June, according to the New York Federal Reserve’s Survey of Consumer Expectations. This is down from 17 percent in February and 46 percent in October.
Mortgage Rate Outlook
Elevated U.S. Treasury yields have lifted mortgage rates since the start of the war in Iran in late February.
Freddie Mac reported last week that the average contract interest rate for a 30-year mortgage is 6.69 percent, up from 5.98 percent in late February.
High war-driven crude oil prices and tighter Federal Reserve policy expectations have been the key factors behind rising yields on U.S. government bonds. The July jobs report could be the next catalyst—up or down—for Treasury securities, says Jeff DerGurahian, head economist at loanDepot.
“With that in mind, a stronger-than-expected jobs report could put upward pressure on rates,” DerGurahian said in an emailed note to The Epoch Times.
“And a report close to expectations may be a non-event, while a notably weak report, including softer wage growth or higher unemployment, could support bonds, helping mortgage rates move lower.”
The U.S. economy is expected to have created about 98,000 jobs in July, based on 12 estimates collected by FactSet Insights. The median estimate for the unemployment rate is 4.2 percent, unchanged from the previous month.
A day before the nonfarm payrolls report, the 30-year fixed rate is 6.77 percent, according to Mortgage News Daily.
