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Vishal Garg, the founder and CEO of online mortgage lender Better.com, said he thinks a recession is imminent in the US and advised potential home buyers to get ready to jump back into the market ahead of potential interest rate cuts as the economy slows.
“I personally believe a recession is coming, and recessionary times are the best time to stop paying rent and be your own landlord,” Garg said Wednesday at Semafor World Economy in Washington, DC. “We encourage our customers to go out there and go home shopping now while homes are available.”
He said pre-approvals for home loans are rising as buyers on the sideline anticipate lower interest rates, though it’s unclear when that could happen given inflationary pressures.
The recession call is not a new one for Garg, who said he sees fresh warning signs for the economy including downsizing in corporate America driven in large part by AI. He expects a significant workforce disruption requiring retraining, adding that Better.com’s AI agent is already at “feature parity” with 80% of the 550,000 loan officers working in the US today.
Garg also pointed to a stretched consumer, noting that most Coachella tickets were purchased on payment plans.
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Better.com has been aggressive in its efforts to disrupt the mortgage industry with technology; Garg said the company’s AI tools make its costs to “manufacture” a mortgage 80% lower than the market average.
Among Better.com’s bets is a partnership with Coinbase and Fannie Mae to enable home buyers to pledge crypto or other assets in lieu of cash for a down payment. Garg said it will broaden the pool of potential buyers to include those who are asset rich but cash light.
“We could dramatically expand the pool of assets available for a down payment to buy a home, and it makes homeownership much more affordable and accessible,” he said.
The company in March also launched an app within ChatGPT that promises to deliver faster lending decisions, saving agents an average of 21 days to close a mortgage.