With the median home price now hovering above $433,000 and mortgage rates showing no sign of easing anytime soon, the dream of homeownership is now reportedly slipping further out of reach for many Americans. For those who do manage to buy, the path often begins online, frequently with Zillow, one of the country’s most popular real estate platforms.
Zillow has increasingly positioned itself as a one-stop shop for homebuyers, pairing listings with its own in-house lending arm, Zillow Home Loans. The company advertises its mortgages as “competitive,” and in 2022, its loan rates were indeed slightly cheaper than many competitors. Since then, however, borrowing through Zillow has become steadily more expensive, according to a new study funded by CoStar.
The study, authored by Steven C. Salop of the Georgetown University Law Center, found that borrowers who used Zillow Home Loans paid higher mortgage costs than those who obtained similar loans elsewhere. On average, the analysis concluded that Zillow borrowers paid between 10% and 15% more in annual percentage rate compared with consumers using other lenders.
In practical terms, the difference is not trivial. In 2024, Zillow mortgages reportedly cost about $4,600 more than competing loans on a typical mortgage size of $337,000. Spread over a standard 30-year mortgage and assuming the loan is held for its full term, that translates into roughly $21 more per month for borrowers.
The study suggests the burden falls most heavily on lower-income Americans, a group already struggling in a punishing housing market. For borrowers earning $60,000 or less in 2024, Zillow loans allegedly added costs equal to about 3% of the loan’s value over time. According to the analysis, these borrowers paid significantly more than comparable borrowers using other lenders.
The report also alleges disparities in pricing by race. It claims that in 2024, white non-Hispanic and Asian borrowers paid an average surcharge of about 1.5% compared with similar loans from other lenders, while black borrowers faced an even higher surcharge of 2.9%. Salop’s analysis drew on federal mortgage data from 2022 through 2024, focusing on 30-year fixed-rate purchase mortgages. The study attempted to compare nearly identical loans by controlling for factors such as borrower characteristics, loan type, geography and broader market conditions.
Zillow has forcefully disputed the findings. The company said the report relies on inaccurate information and emphasized that it was funded by a competitor, raising questions about its objectivity. In a statement, Zillow said it remains committed to fair lending and consumer-focused practices, pointing to what it described as a robust fair lending compliance program.
Still, the scrutiny comes as Zillow faces mounting legal challenges. The company is currently the target of two class-action lawsuits alleging it operates programs that steer high-value sales leads to affiliate real estate agents only if those agents meet internal quotas for securing pre-approved mortgages through Zillow Home Loans.
As housing affordability continues to deteriorate nationwide, the study and ongoing lawsuits are likely to intensify questions about whether large tech-driven platforms are helping struggling buyers or quietly driving up costs at a time when Americans can least afford it.
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