Better improves loan volume by 25% but remains unprofitable in Q1

Better Home & Finance Holding Co., the parent of digital lender Better, strongly improved its mortgage production and revenues in the first three months of 2024. But expenses continued to increase and the company remained unprofitable during the period.

Better posted a net loss of $51.5 million from January to March, up from a loss of $50.8 million in the previous quarter and down from a loss of $87.6 million in the same period last year, according to filings with the Securities and Exchange Commission (SEC) on Monday.

The company’s revenues increased 26% quarter over quarter to $22.2 million, driven mainly by home equity line of credit (HELOC) and cash-out refinance products, executives said. Funded loan volumes came in at $661 million, up 25% quarter over quarter.

Purchase loans comprised 80% of the funded volume, followed by refinances (12%) and HELOCs (8%). The company recently launched a one-day HELOC product that offers approvals within 24 hours of locking the interest rate and allows borrowers to access up to 90% of their home’s value.

Better also produced more loans via its direct-to-consumer channel (54% of the total) than through business-to-business (46%) in the quarter.

“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,” CEO and founder Vishal Garg said in a prepared statement.

Meanwhile, Better’s expenses increased to $73.6 million in the first quarter, up from $69 million in the previous quarter. But expenses were down 30% year over year.

According to Garg, the company will continue to “thoughtfully lean into certain growth expenses to drive increased market share and efficiency, which will be balanced by continued cost discipline to target reaching profitability in the medium term.”

Regarding expenses, Better has shifted its compensation structure to loan officers. In the past, the company attracted noncommissioned loan officers without experience in the industry using fixed compensation. It has now attracted mortgage industry experts and is paying them based on commissions.

Recently, the company changed its leadership structure by hiring mortgage veteran Chad Smith, who was the CEO at Mission Loans, as president and chief operating officer.

Better executives expect the company to produce $800 million in funded loans in the second quarter. 

The company’s stock was trading at $0.44 on Tuesday morning, down 1.15% from the previous closing.