Zillow’s mortgage revenue soars on lower interest rates

A stagnant housing market hasn’t held back Zillow’s mortgage business.

On its third-quarter earnings call Wednesday evening, the real estate portal giant reported that its mortgage revenue rose 63% year over year, driven by an 80% jump in purchase origination volume. Compared to the first nine months of 2023, Zillow’s origination channel revenue grew 41% to $104 million.

Zillow’s shareholder letter attributes the growth to its “integrated financing experience.” According to the company, 40% of shoppers begin the process by looking for a lender and 80% of them don’t have a real estate agent. Zillow believes its end-to-end service options are allowing it to convert more of these types of homebuyers.

A more direct factor is that mortgage rates in the third quarter of 2023 approached 8%, whereas rates declined during much of Q3 2024, getting close to 6%.

While Zillow’s growth is significant given the company only launched its mortgage business in late 2018, falling rates benefited every player in the mortgage industry. Many major lenders that were losing money returned to profitability in the third quarter of this year.

While Zillow shares dropped 6.5% Wednesday after Donald Trump’s victory in the presidential election, shares were up 14% in after-hours trading.

Zillow also touched on issues facing the real estate industry, including the Clear Cooperation Policy (CCP), the National Association of Realtors‘ (NAR) rule that requires Realtors to post properties on a NAR-affiliated multiple listing service within a day of signing a listing agreement with a home seller.

Brokerages such as The Agency and Compass have been vocal in their opposition to CCP. Compass, in particular, has been vocal about its intent to build an exclusive listings inventory, to which CCP is a significant barrier.

Zillow receives listings from MLS feeds, so naturally the company supports the policy and wants it to remain in place.

“The U.S. real estate market is the most transparent market in the world because of policies like this, and we love to see those policies strengthen so we can build great businesses and consumer experiences on top of them, versus weakened [policies] that some can benefit from, trying to pull what is a pretty small share of listings behind a velvet rope for their own benefit,” CEO Jeremy Wacksman said on the earnings call.

The company has also rolled out a form of buyer agent agreements that can be used prior to a home tour, and they are tailored to each state. Wacksman said on the earnings call that the agreements help agents set expectations for buyers throughout the transaction process, not just while touring homes.

“We see this as a really healthy evolution in processing all these settlement changes to help start to educate the buyers on how this process works, to make sure when they meet these great agents, they’re even more educated on what to expect, both in the initial tour and then in what to expect in the relationship if they choose to move forward,” he said.