Following a burst of enthusiasm after reporting earnings late on Thursday, house-flipper Opendoor Technologies Inc. (NASDAQ: OPEN) dropped 5% to end the day at $2.09. The stock is making a come-back Monday morning, likely on investors making a bet that the Fed won’t be raising interest rates any time soon.
Kansas City Blues
This is a boost for Opendoor. One of the arguments plaintiffs made in the trial was that the buyer agents were paid half of the 5% to 6% commission to sellers’ agents stifled competition. The competition in this case included online real estate sites where homebuyers were able to locate homes without an agent’s help. Why should sellers have to pay for a service that homebuyers don’t need?
Return of the Adjustable-Rate Mortgage
If, for example, the initial rate on the ARM loan is 7%, and the interest rate for a home loan declines to 5% over the five-year fixed part of the loan, the interest rate on the loan falls to 5% at the end of the fixed portion of the loan term. It can go even lower because most 5/1 ARMs adjust annually, although some adjust more and others less often.
If (when) fixed-rate mortgage loan costs fall below the ARM rate, ARM holders can pay off their adjustable loans and lock in a lower-cost fixed-rate mortgage.
According to Mortgage News Daily, 5/1 ARM loans carried a contract interest rate of 6.77% last week for a conforming loan (up to $726,000). The fixed rate for a 30-year fixed-rate loan closed the week at 7.86%.
How Opendoor Benefits
Opendoor guided revenue to $800 million to $850 million, well short of the consensus estimate for $1.3 billion in fourth-quarter sales.
Opendoor stock traded up by nearly 9% in Monday’s premarket session and dipped to around 8.1% at around 7:30 a.m. ET, to trade at $2.26 in a 52-week range of $0.92 to $5.41.
Top Gaining Stocks
Top Losing Stocks