Venture capital-backed mortgage lender Better.com is going international. The company, which is expected to go public later this year, has agreed to acquire United Kingdom-based digital mortgage brokerage Trussle.
Terms of the deal were not disclosed, but the Financial Times reported that SoftBank-backed Better bought Trussle for a “cut-price,” one that values the mortgage brokerage at just $9 million.
Trussle’s investors include American bank Goldman Sachs and Amsterdam-based venture capital fund Finch Capital. Founded in 2015, Trussle has raised £26.7m since early 2020, with plans to usurp the traditional mortgage brokerages that dominate the U.K.’s $1.5 trillion residential mortgage market.
According to the FT, Trussle runs at a loss and has been trying to sell itself. Goldman had paid about £8m for about 20% of the company.
Better is one of America’s fastest-growing lenders. It originated approximately $24 billion in mortgages in 2020, up from about $5 billion the prior year. The digital-only lender, whose loan officers don’t make commissions, capitalized on an incredible boom in refinancings.
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According to Better, Trussle works with over 90 lenders to close mortgages for U.K. homeowners. It captures data on consumer demand, lender pricing and risk eligibility. It will utilize Better’s technology to source and execute deals.
Since 2015, Trussle claims to have sourced over £2.7 billion of mortgage approvals for U.K. consumers, including £1.1 billion in the last 12 months. CEO Ian Larkin and the existing management team will continue to lead Trussle following Better’s acquisition.
Like the U.S., the housing market in the U.K. is on fire. That’s despite Brexit and the phasing out of the stamp duty holiday, essentially a waiver on transfer taxes for homes purchased up to £500,000.
House prices in May rose by their fastest annual rate in seven years, though they cooled off a bit in June. As is true in the U.S., people across the U.K. are seeking bigger homes in suburbs outside the cities.
In a press statement, Better founder and CEO Vishal Garg said the acquisition will allow his company to reduce fees and hours spent attempting to receive a mortgage in the U.K.
“Better eliminates the high financing costs, massive transactional friction, tyranny and mind-numbing bureaucracy that comes with getting a mortgage and buying a home in the U.K. via a high street bank,” Garg said. “We researched the U.K. market and were surprised to see how we could make it so much better for consumers buying and financing a home for the first time. We found a kindred spirit in the team at Trussle who have developed a platform that we can work alongside to help every Briton own their own home.”
In May, it announced that it would be merging with Aurora Acquisitions Corp., a blank check company sponsored by Novator Capital. As part of the deal, Masayoshi Son’s SoftBank would commit $1.5 billion into the combined company.
Better claims it would have a post-equity value of $7.7 billion, making it more valuable than all but Rocket Companies and United Wholesale Mortgage. Industry experts say Better will need to prove it can excel during a purchase market to come close to justifying such a valuation.