Home Equity Lending News

Better’s HELOC Volume Soars, LO Comp Revised

Home-secured credit line lending at Better Mortgage Corp. shot up by more than half from the final quarter of last year to the first quarter of this year. The company reported that its shift to commission-based compensation for loan originators is very promising.

During the three months ended March 31, there were 1,991 total mortgages originated for $0.661 billion, parent Better Home & Finance Holding Co. revealed in its first-quarter earnings report. Business improved 25% from the preceding period.

Total mortgage production since 2017 for the New York-based company reportedly exceeds $100 billion. Second-quarter 2024 originations are expected to surpass $0.800 billion.

Better disclosed that approximately 8% of its latest quarterly volume was home-equity lines of credit. That works out to roughly $0.053 billion.

HELOC loan volume skyrocketed 54% from the fourth-quarter 2023. For comparison, full-year HELOC production during 2023 was in the neighborhood of $0.060 billion.

Vishal Garg

“While we believe it is likely the purchase and refinance markets may continue to remain challenging in the near term, we are seeing increased demand from homeowners looking to tap into their home equity, as well as from new homebuyers looking to make a move this purchase season,” Better Chief Executive Officer and Founder Vishal Garg stated in the report. “We expect these green shoot opportunities to help us achieve our growth goals for the year.”

In an earnings call today, Garg responded to a question from a JPMorgan analyst about the need to educate homeowners about home-equity products.

“We have to explain HELOCs and HELoans to an entirely new generation of American homeowners, as well as re-explain it to a generation of homeowners that haven’t had access to it for almost 15 years,” Garg said.

Kevin Ryan

Better Chief Financial Officer Kevin Ryan chimed in during the call, “Our gut is the industry will grow meaningfully over this next 12 months, meaning HELOCs, and we have a really big part to play in that.”

Better said that it has shifted from fixed compensation plans for its loan officers to commission-based plans, and that strategy “has yielded positive early results with respect to loan officer productivity and customer conversion.”

At $51 million in losses, earnings were little changed from the fourth-quarter 2023. Losses were, however, reduced from $88 million in the first-quarter 2023.

Better news