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SoFi pounces on fintech mortgage lender amid housing downturn

Redditers had already caught wind of the deal.

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Elliott Cowand Jr /

SoFi Technologies is on the M&A trail. The company has scooped up fintech mortgage lender Wyndham Capital Mortgage in an all-cash deal for an undisclosed sum. Given the housing market correction, perhaps SoFi was able to get a bargain. The neobank appears to be flexing its muscle in the middle of a banking crisis in the US market. 

The acquisition isn’t expected to affect SoFi’s 2023 outlook but should be accretive by September. SoFi plans to integrate Wyndham’s talent and technology into its lending business to expand its array of home-loan products. 

SoFi is pouncing just as interest rates may have hit their peak. Liz Young, SoFi’s head of investment strategy, told Business Insider that it appears as though the markets have priced in a pair of interest rate cuts. She is fully expecting a rate cut, despite what Fed officials may be peddling, amid a “notable downturn in economic data and more things that see stress in the system.”

SoFi made the announcement on Monday, but the writing was on the wall. A subreddit called SofiStock shared word of the deal several days ago. Apparently, Charlotte, NC-based Wyndham Capital had already changed its logo to SoFi last week before the deal was formally announced, tipping its hand early to the merger.

By taking what SoFi described as a full-stack approach with this deal, it can become more centralized while lessening its reliance on outside partners and processes. 

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 expects the addition of Wyndham Capital Mortgage to help SoFi scale and keep up with the industry’s “accelerated growth.”

SoFi is no stranger to home loans. Its lending segment’s contribution to overall profits increased by two-thirds last year. Meanwhile, Wyndham Capital Mortgage has 20-plus years of operating history behind it and has amassed over 100,000 customers. 

SoFi’s stock barely budged on the news, falling about 1 per cent in step with investor reaction to an acquiring company. However, year-to-date, SoFi’s stock has recouped a chunk of last year’s losses by tacking on roughly 57 per cent so far for a market cap of $4.8bn. 

SoFi is an acquisitive company that purchased payments platform Galileo Financial Technologies in 2020 and digital personal finance company Technisys last year. 

Perhaps when SoFi’s Q2 earnings roll around, the price it paid for Wyndham will become more clear.

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