The news: Zillow is capturing a growing share of the US purchase mortgage market despite declining demand, demonstrating the competitive advantage of integrating lending into the homebuying process.

Zillow Home Loans' purchase mortgage originations surged 55% YoY to nearly $2 billion, per its Q3 2026 earnings. Meanwhile, industrywide purchase originations declined 4%, per Zillow's estimates.

Zillow projects industrywide purchase originations will decline 10% to 15% YoY in Q4 as elevated mortgage rates weigh on demand.

Zooming in: Zillow's Preferred program—which connects prospective homebuyers with real estate agents and loan officers—has helped drive engagement.

In the markets where home loans and Preferred have been integrated the longest, 20% of Zillow customers use Zillow Home Loans, per CEO Jeremy Wacksman.

Zillow also reaches prospective borrowers through mortgage preapprovals before they've selected an agent.

But Zillow isn't immune to housing market pressure. Higher mortgage rates and weak demand are constraining growth: Mortgage revenues grew 32% YoY to $70 million but missed analysts' expectations.

Recommendations for banks: As mortgage demand weakens, banks need to rethink how they attract borrowers beyond offering competitive rates.

Embedding financing into the platforms consumers already use can help banks capitalize on what demand remains in a sluggish market. Banks should pursue partnerships with real estate platforms, homebuilders, and homeownership planning services to reach prospective mortgage borrowers before they start shopping for loans.

This isn’t just a strategy for mortgages. Banks can do the same thing for auto financing by working with dealerships and car-shopping platforms— or for small-business lending through accounting and business management software.

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