Zillow Home Loans More Expensive than Industry Norm, Alleges Study

A new study alleges that Zillow's Home Loans (ZHL) products are more expensive than the industry norm, with consumers paying between 10-15% more for a Zillow Home Loans mortgage than from other lenders.

ZHL products are also more expensive for minority ethnic groups and low-income households.

The study analysed 10,969 Zillow Home Loans and 4,534,925 loans from all lenders combined (including Zillow), dispensed between 2022 and 2024.

The empirical findings suggest that ZHL borrowers would typically pay more for a mortgage than they would for one from other lenders, and would pay nearly $5,000 more over the lifetime of a 30-year mortgage. Meanwhile, consumers of ZHL products tend to purchase cheaper properties. Further analysis showed that ZHL products affect low-income borrowers, veterans, and black and Hispanic consumers more:

...Zillow overcharge has increased over time. While ZHL loans had a $1,043 undercharge in 2022, it has an overcharge of $4,579 in 2024 [and] Zillow overcharge is larger in percentage terms for lower-income borrowers.

The study was conducted by Steven Salop, Professor of Economics and Law Emeritus at Georgetown University. CoStar Group, one of Zillow's biggest rivals (and a legal opponent in a separate lawsuit), provided financial support during Salop's study.

Zillow was sued by a private plaintiff for unfairly pushing consumers towards its mortgage products in November.

Selected quotes from Salop's study include:

Zillow is the leading residential real estate portal and its research found that 23% of home buyers in 2024 and 22% of buyers in 2025 found their agent from a real estate website or app (e.g. Zillow, RE/MAX, Realtor.com). Zillow also reported from its research on home buyers that 79% of buyers said that they installed a real estate app during the homebuying process and 68% of those buyers (i.e., 86% of the 79%) did so before contacting an agent or pursuing the other possible first steps such as contacting a mortgage lender or attending an open house.

Two private antitrust cases have alleged that Zillow engages in deceptive conduct, by steering users to Zillow affiliated buyer agents. The Taylor plaintiffs’ complaint alleges that Zillow deceptively induces users to sign up with a Zillow agent and if the agent participates in Zillow’s “Flex” program, Zillow receives up to 40% of the agent’s commission, a fact which is not disclosed to the buyer. It also alleges that Zillow requires or incentivizes its “Flex” agents to steer users to ZHL, which it alleges are lower quality and higher priced than other loans.

The analysis shows that ZHL mortgages have become more expensive over the course of the 2022-2024 time period, relative to other lenders. While ZHL mortgages were relatively cheaper in 2022, they became relatively more expensive in 2023 and even more expensive in 2024.

In 2022, the net present value (NPV) of lifetime incremental cost of a ZHL mortgage held to maturity (and discounted at 6.5% per year approximately equal to the APR) would be $1,043 lower than those of other lenders after controlling for the factors listed above. In 2023, they became $3,213 more expensive. And in 2024, they were $4,579 more expensive for an average loan size of about $337,000 if held to maturity.

There is significant variation in the overcharges among different races and ethnic groups. The ZHL overcharge for White non-Hispanic home buyers relative to other lenders was 11 basis points ($3,099 NPV) on an average mortgage loan size of about $321,000. For Asian borrowers, the ZHL overcharge was 11 basis points ($3,995 NPV) on an average loan size of $413,330. For Black borrowers, the ZHL overcharge was 21 basis points ($5,362 NPV) on an average loan size of $282,832. By contrast, Hispanic borrowers benefited from a small undercharge of 1 basis point ($276 NPV) on an average mortgage loan size of about $320,100.

The ZHL overcharge for White non-Hispanic home buyers relative to other lenders was 16 basis points ($4,943 NPV) on an average mortgage loan size of about $337,075. For Asian borrowers, the equal annual principal repayments over 30 years, with interest calculated on the declining balance and discounted at 6.5% per year. ZHL overcharge was 16 basis points ($6,417 NPV) on an average loan size of $437,574. For Black borrowers, the ZHL overcharge was 32 basis points ($8,225 NPV) on an average loan size of $285,192. For Hispanic borrowers, there was a ZHL overcharge of 3 basis points ($851 NPV) on an average loan size of $330,815.

Zillow serves a higher proportion of lower- and middle-income borrowers compared to the overall market. While 46% of all borrowers earn $120,000 or more, only 37% of Zillow borrowers fall into this category. Conversely, 20% of Zillow borrowers earn less than $60,000, compared to 15% across all lenders; 32% of Zillow borrowers earn between $40,000 and $80,000, compared to only 26% across all lenders.

Zillow overcharge is present for shorter mortgage holding periods (e.g., 10 years versus 30 years), the magnitude of the overcharge increases with longer holding periods as expected. Fourth, there is substantial heterogeneity in the Zillow overcharge by race and ethnicity, with Hispanic/Latino borrowers benefitting from a very small undercharge in the 3-year period, while White Non-Hispanic/Latino, Asian and Black borrowers face even higher overcharges.