TLDR
- Opendoor (OPEN) stock rose 13.2% to $7.29 on Friday after Trump’s $200 billion mortgage bond purchase announcement
- Treasury Secretary says purchases will match Fed’s $15 billion monthly runoff with FHFA starting at $3 billion
- Analysts predict minimal rate impact of just 10-15 basis points with current 30-year rates at 6.2%
- Trump has 30-50 additional housing policy ideas coming in the weeks ahead
- Fannie Mae and Freddie Mac privatization plans appear on hold as firms become policy tools
Opendoor Technologies finished Friday up 13.2% at $7.29 after President Trump announced a $200 billion mortgage-backed securities purchase program. Trading volume reached 167 million shares.
Opendoor Technologies Inc., OPEN
Trump revealed the plan on Truth Social, claiming purchases would lower mortgage rates and monthly payments. The Federal Housing Finance Agency started with a $3 billion initial purchase.
Treasury Secretary Scott Bessent outlined the framework. Purchases will roughly match the Fed’s monthly runoff of about $15 billion in mortgage-backed securities. The Fed holds just over $2 trillion of these bonds.
Bessent clarified the program probably won’t lower mortgage rates directly. It aims to narrow the spread between mortgage rates and Treasury yields. Current 30-year mortgage rates sit around 6.2%, down from nearly 8% earlier this year.
Chen Zhao at Redfin economics research offered a reality check. The $200 billion injection would likely move rates only 10 to 15 basis points. TD Cowen suggested tightening the spread between 30-year rates and 10-year Treasuries.
Brian Jacobsen at Annex Wealth Management raised concerns. He warned the approach could backfire if demand surges ahead of supply. More buyers without more homes means prices could climb again.
FHFA Director Bill Pulte said the firms have “ample liquidity” for the purchases. Combined cash and equivalents totaled less than $17 billion as of Sept. 30. Pulte declined to specify a timeline.
Opendoor’s business model makes it sensitive to rate changes. It buys homes, holds inventory, and flips them quickly. Rising rates stall turnover almost immediately.
Lower mortgage rates usually boost buyers and sellers, pushing up transaction volume. Even slight borrowing cost changes impact demand, pricing, and financing expenses.
The policy reignited debate over Fannie Mae and Freddie Mac’s future. TD Cowen analyst Jaret Seiberg noted Trump’s language “does not sound like a President who is in a rush to IPO” the firms.
Mike O’Rourke at JonesTrading warned investors shouldn’t count on re-privatization. If these firms become a “funding arm” for presidential policy, their status won’t change soon.
FHFA Director Bill Pulte says Trump has “30 to 50” additional housing ideas coming. Further announcements will arrive in the weeks ahead.
The World Economic Forum gathering in Davos runs Jan. 19-23. Trading resumes Monday with focus on the gap between mortgage bonds and Treasuries.
