Better, a 5-year-old digital mortgage lender, is merging with special-purpose acquisition company Aurora Acquisition Corporation, in a $7.7B deal to take the company public. The transaction is expected to close in the fourth quarter.

Why should we care?
New York-based Better offers home loans through its platform and partners with banks, including Ally Financial. It benefited from a surge of home buying in recent months amid a low-interest rate environment during the pandemic, doling out $25B in loans in 2020 and $14B in the first quarter of this year. It generated $850M in revenue last year, and more than $200M in net profits. There is only room to grow, Better’s investor presentation said, with a $15T market opportunity. The company wants to build a family of financial products for home buyers – a familiar ecosystem-style approach many fintech startups have pursued over the years. Better started out with home financing, and moved to buying and selling (with a realtor matching engine), title, and homeowners insurance. It expects to move into home services, including home improvement loans, and a “financial network” that includes personal finance, auto, student products, credit cards, and life/disability insurance. Better is betting that data and enabling technology is the formula for a life-long relationship with its customers, but time will tell if its growth story won’t hit a snag when interest rates rise and refinancing becomes less attractive for homeowners.