In Housing Slowdown, SoFi Buys Fintech Mortgage Lender
People on Reddit already knew about the deal.
SoFi Technologies is looking for mergers and acquisitions. Fintech mortgage lender Wyndham Capital Mortgage was bought by the company in an all-cash deal for an amount that has not been made public. Since the housing market fell, SoFi may have been able to get a good deal. In the middle of a banking crisis in the US market, the neobank seems to be showing how strong it is.
The purchase shouldn’t change SoFi’s plans for 2023, but it should help the company’s finances by September. SoFi wants to add more home loan products to its lineup by using Wyndham’s talent and technology in its lending business.
SoFi is stepping in right when interest rates may have reached their highest point. Liz Young, head of investment strategy at SoFi, told Business Insider that it looks like the markets have already priced in two interest rate cuts. She fully expects a rate cut, no matter what Fed officials say, because “economic data has taken a significant turn for the worse and there are more signs of stress in the system.”
SoFi made the news public on Monday, but it was already clear. Several days ago, a subreddit called SofiStock posted about the deal. It looks like Charlotte, North Carolina-based Wyndham Capital changed its logo to “SoFi” a week before the deal was officially announced, giving away the fact that the two companies were going to merge.
SoFi says that by taking what it calls a “full-stack approach” with this deal, it can become more centralized while relying less on partners and processes from the outside.
SoFi CEO Anthony Noto stated:
“Several macro- and socioeconomic factors – high inflation and rising mortgage rates, the new world of work, and others – have ushered in a new era across the US real estate market.”
He thinks that adding Wyndham Capital Mortgage will help SoFi grow and keep up with the “rapid growth” of the industry.
SoFi has a lot of experience with home loans. Last year, its lending business contributed two-thirds more to its overall profits. Wyndham Capital Mortgage, on the other hand, has been in business for more than 20 years and has more than 100,000 customers.
SoFi’s stock barely moved when the news came out. It fell about 1%, which is what investors usually do when a company buys another. But so far this year, SoFi’s stock has gained about 57%, making up for some of what it lost last year, giving it a market cap of $4.8bn.
SoFi is a company that likes to buy other businesses. In 2020, it bought the payments platform Galileo Financial Technologies, and last year, it bought the digital personal finance company Technisys.
When SoFi’s Q2 earnings come out, it might be easier to see how much it paid for Wyndham.
