Fintech mortgage firm is popular with those whose homeownership rates lag
Better.com says that its customer base is dominated by customers who are tech-savvy and underserved when it comes to homeownership.
The fintech mortgage firm says that the digital disruptors in the mortgage industry are gaining where traditional players are “painfully analog and plagued with inefficiencies.”
The firm has grown 3.5 times year-over-year and now does $700M a month in mortgages and it says that 40% of applications are made on a mobile device.
The online lender says that millennials, minorities, LGBT married couples, single women, and married women that out-earned their husbands in salary, dominate its customer base.
“It was hugely gratifying for me to consider the fact that Better.com doesn’t do any specific targeting to any of the underserved constituencies that made up the largest swath of our customer base in 2019,” said Vishal Garg, CEO and Founder of Better.com. “The huge uptick we saw in these groups proves that our technology has paved the way for these previously-marginalized folks to become homeowners,” he added. “Our findings suggest that the long-standing discrimination faced by many when it comes to getting a home loan can be significantly reduced through the use of technology to help prevent bias.”
The new face of homeownership
Better.com says there is a new face of homeownership as several underserved groups saw massive upticks in 2019.
1. LGBTQ MARRIED COUPLES: Whereas industry-wide, LGBTQ homeownership remains 16% below the national average, over the last year, Better.com has seen a 10x increase in lending to LGBTQ married couples, totaling more than $35M in home loans. Out of that, nearly 50% of the mortgages Better made to LGBTQ married couples went to borrowers in Red and Swing states, with Florida leading the way (12.36% of borrowers), followed by Texas (11.24%). The news follows a study published in 2019 whose findings are startling: LGBTQ couples were 73 percent more likely to be denied a mortgage than heterosexual couples with the same financial worthiness. Additionally, on average, these couples paid .5 percent more in interest and fees, which collectively adds up to as much as $86 million a year nationally. The research, published by the Proceedings of the National Academy of Sciences, found no evidence that same-sex couples had a higher default risk.
2. WOMEN - BOTH SINGLE AND MARRIED: Over the last year, we saw a few interesting trends when it comes to female borrowers, both married and single who voluntarily disclosed their gender information. Specifically:
Single women between 30-40: Industry wide, the number of single female homebuyers has grown from 15 to 18 percent, or one in five homebuyers. Our findings support this group’s growth - in 2019, we saw a 446% increase in single women between 30-40 who make between $10-20K a month.
5x increase in single women from ages 20-60: In 2019, we also saw a 5x increase in single women of all age groups.
Married women outearning their spouses in salary: In 2019, out of our married couples, we saw the majority of female married co-borrowers outearning their male married co-borrowers, with the females having an average monthly salary of $5,666 vs. $3,035 for men.
1 out of 3 married women who got a loan from us are not putting their spouse on the application.
3. HISPANICS AND AFRICAN-AMERICANS BETWEEN 30-403: A recent analysis from Zillow found that nearly 21% of African-American applicants were denied a conventional loan, as well as 15.5% of Hispanics. And while nationwide the Hispanic homeownership rate is well below the national rate at 47.4% vs. in 2019, we saw a 532% increase in Hispanics between the ages of 30-40 and saw a 411% increase in African-American borrowers between 30-40. In 2019, NerdWallet also rated Better.com one of the top lenders for immigrant borrowers.
4. GEN Z AND MILLENNIAL HOMEBUYERS: Industry-wide, millennial homeownership rates fell 20% over the past decade. In 2019, we saw a 250% increase in millennials getting loans with us and a 675% increase in Gen Z homebuyers (born between 1997-2012.) Additionally, 75% of Better.com’s borrowers were under the age of 45 in 2019, compared to the national rate of 60% for homeowners aged 35-44.
5. BORROWERS WITH STUDENT LOAN DEBT AND HIGH CREDIT SCORES: Industry wide, 20 percent of the decline in homeownership among young adults can be attributed to an increase in student loan debt. However, at Better.com, 1 out of every 4 of our borrowers in 2019 have student loan debt, up from 10% of our borrowers in 2017. In 2019, out of the group with student loan debt, they had an average monthly payment of $369. We also found this group has a surprisingly high average credit score of 754.