Zillow to Offer 1% Down Payments

With interest rates at their highest point in more than 20 years, Zillow is planning to boost the real estate market by offering offering homebuyers a deal: a down payment of 1%. And Zillow will kick in 2% of that down payment at closing, CBS News reports. The program will begin in Arizona before expanding to other states, the company said. Rents are on the rise, as well, making it difficult for potential homebuyers to save up a down payment, said a senior macroeconomist for Zillow Home Loans. Initiatives such as this will lower "the potential barriers to homeownership for those who qualify," said Orphe Divounguy.

The 1% deal is better than the best one offered by Freddie Mac, which is 3%, per Bloomberg. The Mortgage Bankers Association reports that the rise in mortgage interest rates indeed is pricing people out of the market: Mortgage applications have reached a 28-year-low. Zillow cited an example in which a buyer in Phoenix trying to buy a $275,000 home could, under certain conditions, save a down payment in 11 months instead of the typical 31 required for a 3% down payment. Zillow is trying to move beyond being a site only for listing real estate for sale, per Insider, by underwriting loans. (More Zillow stories.)