How Better plans to capture the $15 trillion mortgage market – Part I
Better is the latest fintech unicorn to announce it is going public by merging with Aurora, a Novator Capital sponsored SPAC, after achieving profitability ahead of forecasts following a record year for mortgages.
Other fintech unciorns that recently went or are going public include crypto exchange Coinbase ($COIN), digital brokerage eToro, and payments infrastructure Marqeta, which filed its S-1 documents with the Securities and Exchange Commission (SEC) this week, signaling its IPO is imminent.
This week, Lindsay Davis, Atomic’s Head of Markets, Zach Anderson Pettet, Head of Partnerships at Bond, and Sipho Simela, Ocrulus’s Head of Mortgage, catch up on Better.com’s SPAC plans and the mortgage opportunity on the For Fintech Sake podcast.
Better SPAC Facts:
Better.com is merging with the Aurora Acquisition Corp. SPAC sponsored by Novator Capital (ticker: $AURC). An affiliate of SoftBank will invest $1.3 billion in the PIPE and Aurora’s Sponsor, Novator Capital, will invest $200 million via PIPE investment. The transaction reflects a post-money equity value of approximately $7.7 billion.
- $15 trillion mortgage market opportunity
- $30.9 billion loans funded since Better’s founding in 2016
- $400 million in funding and live in 47 states to expand products and services
Macro-economic drivers broadly include near 0% interest rates, a record year for originations, and lower regulatory barriers for upstarts to capture digital demand.
Additionally, 2020 was a milestone year for Better:
- $281.1 million adjusted 2020 EBITDA
- 70,288 total funded loans
- $24.2 billion in funded loan volume, up 490% year-over-year (YOY) from 2019
- .5% implied market share (Fannie)
- $7.7 billion in title insurance placed, 855% growth from 2019
- $1.4 billion in homeowners insurance placed 300% growth from 2019
- 68,209 customers got pre-approved for $25 billion of home financing in an average of 14 minutes in March 2021
What’s next? Better paths to homeownership
Better has been expanding from mortgage into insurance with real estate, title, and homeowner’s insurance. Better Cover and Better Settlement Services, its insurance divisions, have provided approximately $7 billion in cumulative coverage.
On the product roadmap through H1 2022, Better plans to expand to home services and improvement loans and to create a network lender for personal, auto, student, credit cards, life & disability insurance.
In Part II of this post, we dig into the macro drivers and open opportunities for payroll APIs in the mortgage market. https://atomic.financial/insights/payroll-apis-mortgage-better-homeownership/