I fully agree, it would be stupid to deny and escalate this into something more problematic. I don't get why so many characters have to resort to lies when the truth is way safer and would cause way less problems. It would be diffrerent if he was a criminal, but he isn't and his secret is not even something special.
If he answered yes, I am related. SHe would've stopped the discussion there or enter a different topic, because then, "ah so that's why he feels similar to Ephthal", her suspicions would've died out, what would probably happen would be her asking him about his family, then he could enter into this point, "I don't want to talk about them" to end the conversation because his father and his stupid brother did smear the family's name.