CFPB Says Home Mortgage Borrowers Are Paying "Discount Points" to Lower Interest Rates

The CFPB reported that a majority of home mortgage borrowers paid "discount points" upfront as overall interest rates rose.

According to a CFPB "Data Spotlight," relying on data collected pursuant to the Home Mortgage Disclosure Act ("HMDA"), (i) nearly 9 out of 10 borrowers paid discount points, including cash out refinances; (ii) "more borrowers paid discount points as interest rates increased;" and (iii) "borrowers with lower credit scores were more likely to pay discount points."

The CFPB said that the percentage of homebuyers paying discount points roughly doubled from 2021 to 2023 and warned that the "financial tradeoffs involved in discount points are complex, creating risks for consumers." The CFPB said it is "monitoring increases in borrowers paying discount points, as well as increases to the amount borrowers are paying in points."