Better to enter U.K. mortgage biz with Trussle acquisition

Following up on plans to bring its services to the international consumers, is acquiring London-based online mortgage broker Trussle Lab.

Terms of the deal were not disclosed.

International home finance makes up $3.6 trillion of the over $15 trillion market for Better’s services, according to an estimate from a June investor presentation prepared for Better HoldCo’s upcoming merger with Aurora Acquisition, a special purpose acquisition company. That amount topped the $3 trillion opportunity expected in the U.S. in 2021 and 2022, based on Fannie Mae forecasts.

Both Better and Trussle have some high profile investors on their respective rosters. American Express and Softbank are among Better’s backers, while Rabo Frontier Ventures (a unit of Rabobank) and Goldman Sachs have put money into Trussle, according to Crunchbase.

“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,” Vishal Garg, Better’s CEO, said in a press release. “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.”

First quarter gross mortgage lending in the U.K. totaled 83.3 billion pounds ($115.7 billion), the most since the fourth quarter of 2007, according to the Financial Conduct Authority. That was up from 76.6 billion pounds ($106.4 billion) in the fourth quarter and 65.8 billion pounds ($91.4 billion) in the first quarter last year.

A total of 1.56 trillion pounds ($2.2 trillion) in mortgages are outstanding in the U.K. as of March 31, the FCA said.

For 2021, 283 billion pounds of gross mortgage lending volume ($393 billion) is expected, according to a January report from the Intermediary Mortgage Lenders Association.

Trussle does not charge borrowers for its services; instead it receives a “procuration fee” from the lender, which appears to be similar to the yield-spread premium U.S. wholesalers pay mortgage brokers. On average, U.K. mortgage brokers charge a 500 pound ($694) fee, the company’s website said.

“It is 27 years since the World Wide Web was launched and most consumer industries have embraced it by now but the UK mortgage market is still characterized by analogue systems and processes,” said Ian Larkin, CEO of Trussle. “This market should not require consumers to apply for a mortgage five months before the end of the Stamp Duty holiday.”

Trussle’s management team, including Larkin, will remain in place after the acquisition is completed.

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