Better.com Consumer Trend Report 2019: How FinTech Has Innovated the Traditionally Archaic and Antiquated $15 Trillion Mortgage Industry, Ushering in a New Digitally-Native and Traditionally Underserved Customer Base

While owning a home has long been the cornerstone of the American dream, it’s head-scratching that in today’s on-demand Amazon and Venmo digital world, the mortgage industry – with $15 trillion in assets – has remained painfully analog and plagued with inefficiencies. Even in 2019, nearly 60% of loan files have between 500-2,000 pages of paperwork, in addition to hidden costs and a process that requires manual intervention at every step from application and processing, underwriting and closing.

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However, in recent years, the rise of fintech and rules-based machine learning has ushered in a new type of homeowner – one that is digitally-savvy and typically underserved when it comes to homeownership.

In fact, online mortgage lender Better.com, which has grown 3.5x year-over-year and does $700M a month in mortgages, saw 40% of their borrowers complete their application from a mobile device in 2019. Interestingly, that corresponds with a dramatic shift in Better.com’s customer base, which in 2019 was largely dominated by millennials, minorities, LGBT married couples, single women and married women that outearned their husbands in salary.

“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 following is a snapshot of the new face of homeownership and the five core groups Better.com saw massive growth with during 2019.¹²

5 CORE AND NATIONALLY UNDERSERVED GROUPS BETTER.COM HAS SEEN MASSIVE UPTICKS WITH 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.

¹ Better.com has grown 3.5x year-over-year, so the numbers should be contextualized to reflect Better.com’s overall growth. The following just happens to be the five core sub-groups Better.com saw surprisingly large increases in during 2019.

² Under the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA), lenders must give equitable treatment of all applicants without regard to race, sex (including gender), sexual orientation, color, national origin, religion, age and marital status. Therefore the numbers being disclosed are based on the borrowers who voluntarily chose to fill out these questions.

³ Under the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA), lenders must give equitable treatment of all applicants without regard to race, sex (including gender), sexual orientation, color, national origin, religion, age and marital status. Therefore the numbers being disclosed are based on the borrowers who voluntarily chose to fill out these questions.

About Better.com: Better.com is one of the fastest-growing homeownership companies in the country, having grown 3.5x year-over-year and funding over $700 million in mortgages a month. The fintech disruptor took apart the home-financing ecosystem, replacing it with a digitized process that eliminates commissions, fees, unnecessary steps, and time-wasting appointments. In 2019, Better.com also launched homeowners insurance, title insurance and real estate network. Better.com has raised more than $250M in equity from Kleiner Perkins, Goldman Sachs, American Express Ventures, Ally Financial, Citi and other investors.

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