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A week after announcing a new in-house mortgage product, Opendoor has another move up its sleeve — 4.99 percent mortgages. The company’s CEO said the offering has “obvious scale advantages.”

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Five percent. That’s the magic number the industry has been waiting for, hoping it’ll unlock a floodgate of buyer and seller activity that’s been stifled since rates rebounded from historic lows in 2021. However, economic headwinds have prevented rates from dipping back into the 5-percent range, keeping consumers in limbo as they try (and fail) to time the market.

So, what’s an iBuyer looking to reignite consumer fervor to do? Decide they’ll offer 4.99 percent rates — even if it may temporarily add to their already 10-figure losses.

Kaz Nejatian

“We’ve rate locked a 4.99 percent mortgage on Opendoor homes for buyers,” Opendoor CEO Kaz Nejatian said on X, formerly known as Twitter, on Tuesday. “The product is in beta still. We have a lot to learn. Going well. Very early days.”

“…Structurally, at least 65-85 [basis points] worth of yield of any mortgage is the margin and inefficiency that goes to the chain of companies and sales and ops people that touch that mortgage,” he added. “You reduce that, you reduce the costs. There are also obvious scale advantages. We haven’t invented new math here. What we have done is say, if our goal was to offer the lowest mortgage rate possible, rather than make the most amount of money possible, what would we do?”

Nejatian teased Opendoor’s in-house mortgage product during the company’s latest earnings call, which revealed the iBuyer’s fourth-quarter revenue had dropped 47 percent year over year to $736 million, while net losses widened to nearly $1.1 billion. However, the CEO remained bullish on “Opendoor 2.0,” with artificial intelligence and product development accelerating the company’s path to profitability.

This isn’t Opendoor’s first tango with mortgages.

The iBuyer launched its first product in 2019 and shuttered it three years later as rising rates made the venture untenable. However, it seems to be starting on a better footing the second time around, with the acquisition of mortgage education and data platform, HomeBuyer.com, serving as a foundation for its lending strategy.

“While HomeBuyer.com isn’t currently a loan originator, the deal strengthens Opendoor’s mortgage-related expertise and buyer insights, which analysts see as supportive of broader lending strategy ambitions,” a previous Inman article explained. “If fully developed and scaled, such a model could allow buyers to browse homes listed on Opendoor’s platform, input financing information within the same ecosystem, and receive mortgage options tied directly to their purchase.”

“That would effectively combine search, financing, and closing into a single digital experience,” it added.

As for the logistics of offering a 4.99 percent mortgage, Nejatian declined to offer a detailed explanation, instead saying it’s “a lot of hard work” and that Opendoor “will share more soon.”

He did clarify that the rate won’t be available indefinitely, or to everyone.

“We are early, but we have been able to automate away much of the flow, and we believe we can automate the rest,” he said. “… Our mortgage product is live only in limited flows in limited places. We are early. But, thus far, we think we are onto something … Again, we are early. But we are committed to solving this for American homeowners.”

Email Marian McPherson

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