A recent and controversial report funded by CoStar, a competitor of Zillow, revealed that borrowers who obtained mortgage financing from Zillow Home Loans (ZHL) between 2022 and 2024 paid higher costs compared to those who used other lenders.
The study, which sparked widespread criticism, found that Zillow loans may be more expensive over the long term. However, separate analyses reached different conclusions.
The report, prepared by Professor Emeritus Steven C. Salop of Georgetown University and published on December 21, 2024, was based on an analysis of 30-year fixed-rate mortgage data drawn from the Home Mortgage Disclosure Act (HMDA). It revealed that ZHL loans were up to 10 basis points more expensive annually between 2022 and 2024, with an additional increase of up to 15 basis points by 2024.
In response, Zillow stated that the report was funded by a competing party and relied on selectively chosen data without accounting for many factors that influence pricing. A Zillow spokesperson described the study as misleading and emphasized the company’s commitment to fair lending and consumer interests, noting the importance of additional factors such as property location, borrower credit scores, and loan types.
On the other hand, the report also faced criticism from Charles River Associates, where Salop serves as an advisor. The firm rejected the report’s conclusions, explaining that HMDA data does not provide a comprehensive picture due to the absence of key pricing inputs typically used in mortgage loan evaluations.
The report further raised questions about the impact of demographic and racial differences in loan data. The analysis found that low-income borrowers were the most exposed to higher ZHL costs compared to other lenders. It also revealed clear racial disparities, with Black borrowers paying significantly higher costs than others.
Despite the report being funded by CoStar, its author asserted that the analysis was conducted independently and that the findings reflect his personal views only. This overlap between competing companies highlights the depth of the ongoing dispute between CoStar and Zillow, which has also involved legal actions related to alleged copyright violations.
