(Bloomberg) -- Zillow Group Inc. is offering mortgages with just a 1% down payment as it tries to attract house hunters facing the most-unaffordable market in almost four decades.
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The 1% down payment program is even lower than Freddie Mac’s best of 3%, with Zillow offering to pay 2% of the down payment at closing, according to a statement Thursday.
It comes after mortgage rates in the US hit a 22-year high Thursday, further squeezing would-be homebuyers. The average for a 30-year, fixed loan was 7.23%, the highest since May 2001 and up from 7.09% last week, Freddie Mac said in a statement Thursday.
The 1% offering comes as Zillow looks to grow its customer base and may “even the playing field with larger competitors,” Bloomberg Intelligence said, but it will likely hurt margins and paying 2% at closing could prove costly in the long term.
Zillow is offering the new program in Arizona first before expanding to other markets. The company shuttered a similarly ambitious foray into home flipping in 2021 after steep losses.
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