Borrowers who use Zillow Home Loans pay more, study suggests
A new report, which received funding from Zillow competitor CoStar, found that ZHL borrowers paid more than those who used other lenders between 2022 and 2024.
Borrowers who get their mortgages through Zillow Home Loans (ZHL) may end up paying more over time than those who use other lenders, a new study suggests.
The 40-page report, titled "Empirical Analysis of Zillow Home Loans Pricing," was published Dec. 21 by Georgetown University Professor of Economics and Law Emeritus Steven C. Salop. It received funding from CoStar, the parent company of Zillow home search rival Homes.com.
The study, which a Zillow spokesperson said draws "inaccurate and misleading conclusions," pointed to two class-action lawsuits filed this fall — Taylor v. Zillow and Armstrong v. Zillow — which accuse Zillow of boosting ZHL through illegal kickbacks.
In the wake of those cases, which a judge merged earlier this month, Salop set out to determine whether loans secured through Zillow's mortgage business "are more expensive than the mortgages offered by other lenders" — and finds that they are.
What the study analyzed: Salop assessed loan origination data made publicly available via the Home Mortgage Disclosure Act. The law requires lenders to share a wide range of information on lending activity, including interest rates, fees, borrower demographics, loan amounts and property types.
The report analyzed data for 30-year fixed-rate mortgage originations from 2022 to 2024, comparing the 10,969 ZHL mortgages originated in that time to those from other lenders.
It found that ZHL mortgages "have become more expensive over the course of the 2022-2024 time period, relative to other lenders," and that the number and sizes of ZHL loans also increased.
What Zillow had to say: A Zillow spokesperson noted that the study "was commissioned and paid for by a competitor and relies on selectively chosen data to produce a distorted view of Zillow Home Loans."
The study doesn't assess "critical" price factors such as business models, service levels and customer choice, the spokesperson told Real Estate News. "Any credible analysis cannot just look at the base pricing as this study does; you have to control for factors such as loan products, geography, and credit score — to do anything short of this does not accurately depict the data."
Zillow Home Loans "is committed to both fair lending and pro-consumer practices," the spokesperson said, adding that they stand by their business model.
A closer look at the report: Over the study's three-year period, ZHL borrowers were found to "pay significantly higher mortgage costs than they would pay to other lenders" — costs that were equivalent to a mortgage APR about 10 basis points higher overall and 15 basis points higher in 2024 alone. For example, the study found that borrowers taking out a $337,000 30-year loan in 2024 would pay an extra $21 a month.
Salop wrote that it "will be useful to analyze the 2025 data" once it's available "to see how the market has further developed."
Income, race differences: Lower-income borrowers tend to be impacted more by ZHL price differences, the report found, with borrowers who make $100,000 or less particularly affected.
Salop's analysis also suggested that there are racial differences between which borrowers typically pay more. While white and Asian ZHL borrowers faced similar costs from 2022 to 2024, the difference was nearly double for Black ZHL borrowers. Latino ZHL borrowers didn't face higher mortgage costs relative to other lenders until last year.
Competitor funding? The study noted that its funding was provided by CoStar, the parent company of Homes.com. In addition to battling in the portal wars, the companies have also faced off in court this year over alleged copyright violations.
But CoStar's funding "was not contingent on the results of the analysis," Salop wrote. "All analysis, opinions and any errors are my own and are not those of CoStar or any other person at any organization with which I am affiliated."