Tech

VCs expect a surge in startups offering lower rate mortgages, other loans now that the Feds cut rates

Published

2 weeks ago

September 30, 2024

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When the U.S. Feds cut interest rates by half a percentage point last week, it was a dash of good news for venture capitalists backing one particularly beleaguered class of startups: fintechs, especially those that rely on loans for cash flow to operate their businesses.

These companies include corporate credit card providers like Ramp or Coast, which gives cards to fleet owners. The card companies make money on interchange rates, or transaction fees charged to the merchants. “But they have to front the money by getting a loan,” said Sheel Mohnot, co-founder and general partner at Better Tomorrow Ventures, a fintech-focused firm.

“The terms of that loan just got better.”

Affirm, a buy now, pay later (BNPL) company founded by famed PayPal mafia member Max Levchin, is a good case study. While Affirm is no longer a startup — having gone public in 2021 — when interest expenses rose, its stock price tanked, dropping from around $162 in October to hovering at under $50 a share since February 2022.

BNPLs pay merchants the full amount up front; then they allow that customer to pay for the item over a couple of payments, often interest-free. Many BNPLs generate revenue primarily by charging merchants a fee for each transaction processed on their platform, not interest on the purchase. Their business model didn’t allow them to pass on the dramatically higher costs they incurred.

“BNPLs were making money hand over fist when interest rates were zero,” Mohnot said.

Affirm competes with a host of BNPL startups. Klarna, for instance, is a player that’s been expected to IPO for years but still isn’t ready in 2024, its CEO told CNBC last month. Some BNPL startups didn’t survive at all, like ZestMoney, which shut down in December. Meanwhile, other lending fintechs also shuttered because of high interest rates like business-building credit card Fundid.

Counterintuitive as it may seem, lower rates are also good for fintechs that offer loans. Car loan refinancing company Caribou, for instance, falls into this bucket, predicts Chuckie Reddy, partner and head of growth investments at QED Investors. Caribou offers one- to two-year loans.

“Their whole business is predicated on being able to take you from a higher rate to a lower rate,” he said. Now that Caribou’s funding costs are lower, they should be able to reduce what they charge borrowers.

GoodLeap, a provider of solar panel loans, and Kiavi, a lender specializing in loans for “fix-and-flip” home investors, are other short-term lenders expected to benefit. Just like Caribou, they can potentially pass on some of their interest savings to customers, leading to a surge in loan origination volume, said Rudy Yang, fintech analyst at PitchBook.

And no sector should be helped by lower interest rates as much as fintech startups taking on the mortgage loan industry. However, it could be some time before this recently beat-up space sees a resurgence. While the cut the Feds made was a biggie, interest rates are still high compared to the long ZIRP (zero interest rate policy) era that preceded it, when Fed rates were at near zero. The new Fed rates are in the 4.5% to 5% range now. So the loans available to consumers will still be a few percentage points higher than the base Fed rate.

Should the Feds continue to cut rates, as many investors hope they will, then a lot of people who bought homes during the high-rate time will be looking for better deals.

“The refinancing wave is going to be massive, but not tomorrow or over the next few months,” said Kamran Ansari, a venture partner at VC firm Headline. “It may not be worth it to refinance for half a percent, but if rates decrease by a percent or one and a half percent, then you will start to see a flood of refinances from everybody who was forced to bite the bullet on a mortgage at the higher rates over the last couple of years.”

Ansari anticipates a significant rebound for mortgage fintechs like Rocket Mortage and Better.com, following a sluggish performance in recent years.

After that, VC investor dollars will almost certainly flow. Ansari also predicted a surge in new mortgage tech startups if interest rates become more appealing.

“Anytime you see a space that’s gone dormant for four or five years, there are probably opportunities for reinvention and updated algorithms, and now you can do AI-centric underwriting,” he said.

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Tech

Hurricane Milton: Online experts you can trust

Published

1 hour ago

October 12, 2024

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Hurricane Milton is the monster storm churning through the Gulf of Mexico, and is headed toward the populated Tampa Bay region of Florida. Numerous weather experts are watching the major hurricane closely, sharing real-time updates about what’s being forecast as possibly the worst storm to strike Tampa in a century.

The wind and storm surge predictions are so dire that both Tampa mayor Jane Castor and President Joe Biden are urging residents in evacuation zones to flee, or face imminent death.

But finding accurate information online about Milton’s path and landfall isn’t easy. Conspiracy theories and misinformation about the hurricane are rife. The situation is so bad that the White House’s new Reddit account will start debunking bad information circulating about Milton and Hurricane Helene, which tore through parts of Florida and the southeast just weeks ago.

Meanwhile, bona fide weather experts are worn out by untrained posters and commenters who think they know a thing or two about tropical cyclones.

To help you filter out the falsehoods, we’ve assembled a list of trusted weather experts on X/Twitter who’ve been tracking Milton. Of course, accounts run by the National Hurricane Center and the National Weather Service, federal agencies tasked specifically with updating the public around the clock, are also trustworthy.

Now, here are top weather experts to follow for accurate information, presented in alphabetical order:

Dr. Levi Cowan, @TropicalTidbits

Expertise: Owner and developer of the hurricane forecasting site Tropical Tidbits

Tomer Burg, @burgwx

Expertise: NWS Weather prediction center meteorologist

Mashable Light Speed

Dylan Federico, @DylanFedericoWX

Expertise: FOX4 Dallas-Ft. Worth meteorologist

Bill Karins, @BillKarins

Expertise: Certified broadcast meteorologist for NBC News

Philip Klotzbach, @philklotzbach

Expertise: Senior research for the department of atmospheric science at Colorado State University

Brian McNoldy, @BMcNoldy

Expertise: Senior research associate at the University of Miami Rosenstiel School of Marine, Atmospheric, and Earth Science

John Morales @JohnMoralesTV

Expertise: Hurricane specialist for NBC 6 South Florida

Stephen M. Strader, @StephenMStrader

Expertise: Severe storms meteorologist

Brian Tang, @btangyWx

Expertise: Associate professor of atmospheric science at University at Albany

Eric Webb, @webberweather

Expertise: Government meteorologist

Dr. Kim Woo, @DrKimWood

Expertise: Associate professor in the department of hydrology & atmospheric sciences at the University of Arizona

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Tech

NASA Astronaut Flies Over Hurricane Milton As It Nears Landfall In Florida, Shares Scary Video

Published

6 hours ago

October 12, 2024

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NASA astronaut Matthew Dominick has photographed Hurricane Milton which is due to make landfall in Florida today. Currently aboard the International Space Station (ISS), Dominick captured scary views of the massive storm that is churning in the Gulf of Mexico from inside a SpaceX Dragon spacecraft.

“We flew over Hurricane Milton about 90 minutes ago. Here is the view out the Dragon Endeavour window,” Dominick captioned his post which featured another Dragon capsule visible through the station’s window. “Expect lots of images from this window as this is where I’m sleeping while we wait to undock and return to Earth,” he added.

He also posted a timelapse video as the station cruised over the hurricane.

Hurricane Milton, the National Hurricane Center (NHC), said is a category 5 hurricane with maximum sustained winds of over 265 km per hour.

“Large area of destructive storm surge expected along portion of west-central coast of Florida Peninsula. If you are in a Storm Surge Warning area, please evacuate if told by local officials,” it said in a warning on X.

ALSO SEE: NASA Shares Frightening Video Of Hurricane Helene Shot From Space Station

It also said that Milton can be one of the most destructive hurricanes on record for west-central Florida. Thousands have already fled the hazardous regions as a precautionary measure.

There are actually three Hurricanes that have developed in the Atlantic basin.

Hurricane Milton, Hurricane Kirk and Hurricane Leslie in the Atlantic Basin. Image: NOAA

The other two are Hurricane Leslie, which has grown stronger and could intensify in a day or two, and Hurricane Kirk west of Europe.

This is reportedly the first time in recorded history when three hurricanes are simultaneously active in the Atlantic basin which includes the Atlantic Ocean, the Caribbean Sea and Gulf of Mexico.

ALSO SEE: NASA Astronaut On Space Station Captures Meteor Exploding Over Earth; Watch

(Image: X/@dominickmatthew)

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Tech

NASA Wants To Land Humans On Mars By 2035; Here’s What The Agency Has In Mind

Published

11 hours ago

October 11, 2024

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NASA is planning to land astronauts on Mars by the mid-2030s. The agency reportedly wants to take astronauts to the red planet for exploration by 2035 under the Artemis Program. The Program builds on the legacy of the Apollo missions which saw 12 men walk on the Moon.

Missions under Artemis will serve as a test bed to prepare NASA for journeys to Mars. The program began with the uncrewed launch of Artemis 1 on November 16, 2021 and lasted 25 days.

The surface of Mars. Image: NASA Perseverance rover.

NASA also wants to land astronauts on the Moon for the first time since 1972 during Artemis 3 which will launch no earlier than September 2026.

But the agency is already looking to humanity’s next stop – Mars. According to the plan chalked out by the agency, the astronauts flying to the red planet will travel 402 million kilometres over the course of six to seven months one way. Besides, the astronauts might spend up to 500 days on the Martian surface before they return.

Mars is believed to have formed about 4.6 billion years ago, making it as old as the solar system. Scientists say it was very Earth-like, as it had liquid water and a denser atmosphere roughly 3.8 billion years ago. But the modern-day Mars no longer resembles its past self as there are no traces of liquid water (although polar region have ice deposits) and the atmosphere is just 1 percent the volume of Earth. The atmosphere mostly comprises carbon dioxide, about 95 percent.

ALSO SEE: SpaceX’s Starship Will Launch With Astronauts To Mars In Four Years: Elon Musk

NASA has a Human Exploration of Mars Science Analysis Group which has been assigned the job to frame questions that the astronauts will attempt to find answers to. One of the major ones is finding signs of life, past or present on Mars.

Scientists are hopeful that they might just find something as water is considered an essential point of origin for life. They have found evidence that water once flowed on Mars and that there were vast oceans churning on the planet. The Perseverance rover, is exploring the Jezero crater, an ancient river delta.

Joel S. Levine, wrote in a report, that another key question that has been proposed by the analysis group is investigating the environmental changes that led Mars to lose its water and atmosphere.

The nearest crewed mission NASA is working toward is Artemis 2 targeted for launch in September 2025. Four astronauts – Christina Koch, Victor Glover, Reid Wiseman and Jeremy Hansen – will make a trip around the Moon and return without landing on the Moon. The mission is intended only to test the SLS rocket and the Orion spacecraft with humans onboard.

ALSO SEE: Liquid Water Discovered On Mars? NASA Lander Unveils Explosive Evidence

(Image: NASA)

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