(Bloomberg) -- Citigroup Inc. has made a minority investment in mortgage infrastructure fintech Pylon, pushing further into the mortgage market, according to a statement seen by Bloomberg.
The Wall Street behemoth joins investors such as Peter Thiel in backing Pylon, which helps originate mortgages through automation and provides interim financing to its customers until the loans reach the capital markets. The tech platform helps bring origination costs down, Pylon’s chief executive officer and founder, Trent Hedge, said in an interview.
Citi will be able to buy Pylon mortgages through its trading desk, subject to certain underwriting criteria, Patrick Brett, the head of Citi’s Spread Products Investments Technologies unit, said in an interview. The bank then has the option to either sell them or package them into mortgage-backed securities. The deal will also allow Pylon clients access to Citi’s products and rates and potentially the trading desk’s liquidity. Financial terms of the investment were not disclosed.
The deal comes as US homebuyers face persistently high borrowing costs, which has led to a slowdown in home sales over the last couple of years. The average 30-year mortgage rate was 6.9% as of Nov. 15, according to data from the Mortgage Bankers Association, up about 40 basis points from a month prior.
“The consumer attitude has changed, more borrowers are using point of sale loans,” Brett said. “Pylon is extending that into the mortgage market.”
“Our connectivity with Citi’s mortgage trading desk delivers the same unobstructed access to Wall Street that was previously only available to the largest market participants,” Hedge said in the statement.
Citi made the investment through its SPRINT unit and Citi Ventures, according to the statement. Hedge said Pylon has so far secured about $30 million in funding from a variety of investors, including Conversion Capital, Allegis Capital, QED Investors and Fifth Wall.
Founded in 2022, Pylon serves clients including wealth management tech firms and homebuilders. Citi SPRINT makes strategic equity investments in startups focused on specialty lending, alternatives and real estate.
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