Americans will pay $11 billion more than they need to on mortgages this year

Data: Tomo Mortgage. Note: Worst rate is the 95th percentile. Best rate is the 5th percentile. Chart: Axios VisualsAmid all the talk of what's happening to mortgage rates, it's often easy to lose sight of the fact that rates vary widely between lenders on any given day.That gap has grown significantly over the past couple years.Why it matters: It's not easy to work out how attractive a mortgage rate is. Two offers from two different companies might have different headline rates, but might also vary on everything from origination fees and closing costs to the amount of money it costs to "buy points" and lower the interest rate paid.That makes apples-to-apples comparisons extremely difficult.Follow the money: Americans will collectively pay $11 billion more than they needed to on their mortgages this year, per new research from Tomo Mortgage.Tomo studied about 1 million loans from more than 1,000 different lenders and normalized each one for rate points, credit, purchase price, and down payment.The difference between the best and worst rates offered on any given day worked out to $287 per month in mortgage payments on a home that sold for the median sale price.Between the lines: The gap between the best and worst rates was regularly as low as 0.5 percentage points between 2018 and 2021, but then the Federal Reserve started hiking rates in 2022.These rate hikes sent mortgage rates soaring, which in turn pushed refinance activity close to zero, a major hit to the profitability of the mortgage sector.Some lenders responded by offering aggressive rates, Will Begeny from Tomo says, while others found themselves needing to pad their margins.As a result, the gap between the best and worst rates rose to more than 2 percentage points on some days in the fall of 2022. (It's now closer to 0.88 percentage points.)Where it stands: Mortgage rates are still high in absolute terms, refinancing activity is low, and the difference between a good rate and a bad rate is much bigger than normal.The bottom line: Shop around.

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