Better.com Plans Tokenized Mortgages
Better.com CEO Vishal Garg announced plans to use tokenized capital to offer mortgages with sub-5% interest rates. The move represents a significant fintech innovation, applying blockchain concepts to the traditional mortgage market to potentially lower costs for consumers. It's a notable attempt to disrupt the core economics of home lending.
Venture capital firm Framework Ventures is set to acquire a 10% stake in Better.com for approximately $45 million, a move connected to the lender's push into asset tokenization. Better.com intends to issue tokenized products backed by a substantial $500 million in mortgage and other loan assets. The initiative will leverage a partnership with the DeFi ecosystem Sky to bring on-chain mortgage assets forward. The collaboration aims to connect decentralized finance (DeFi) with traditional housing finance by channeling crypto-native capital into the U.S. mortgage market. Better will serve as the "home finance Star" within the Sky stablecoin ecosystem. This injection of "tokenized capital" is the mechanism Better.com hopes will reduce financing costs, potentially by more than 100 basis points per year. The ultimate goal is to pass these savings to consumers, enabling the company to offer mortgage rates below 5% while the rest of the market is above 6%. Initially, the tokens, potentially named "Home Token," will be available only to accredited investors. However, CEO Vishal Garg has confirmed the company plans to eventually explore how to make these accessible to retail consumers, though a specific timeline has not been announced. This strategic pivot follows a challenging period for the company. After a planned 2021 IPO with a $7.7 billion valuation was delayed, Better.com finally went public in August 2023 via a SPAC merger. The public debut was rocky, with the stock price falling over 90% on its first day of trading. The company has faced significant headwinds, including multiple rounds of layoffs that cut its workforce by about 91% over 18 months and a net loss of $89.9 million in the first quarter of 2023. Despite revenue growth in 2024, the company remained unprofitable with losses of $206.29 million. The move into tokenization represents a significant bet on financial innovation to alter the company's trajectory. By aiming to eliminate layers of intermediaries, Better.com seeks to fundamentally lower costs and scale its origination volume from a current run-rate of $500 million per month to over $1 billion in 2026.
