Mortgage rates, you see, have been a positively tiresome burden on the American economy, and, frankly, a bit of a bother for certain individuals in positions of power. One does wish things would simply…flow. After a rather enthusiastic housing boom during the pandemic – a fleeting moment of optimism, naturally – rates soared with the inevitable inflationary period of 2022, and have remained stubbornly high. The result? A housing market as listless as a debutante at a garden party.
Our current administration, ever resourceful, has been applying pressure to the Federal Reserve – a rather obvious tactic, really – and now proposes a new approach. Fannie Mae and Freddie Mac are to purchase a substantial quantity of mortgage bonds – a cool $200 billion, if you please. The logic, naturally, is that increased demand will nudge prices upward and yields downward. A perfectly reasonable assumption, though one wonders why it hasn’t been considered before. The 30-year mortgage rate last week dipped to 6.06% – the lowest in three years. A minor victory, perhaps, but a victory nonetheless. And where there are minor victories, there are, naturally, opportunities. Let us examine a couple of stocks that might benefit from this… easing.
1. D.R. Horton
Homebuilders, darling, are always exquisitely positioned to capitalize on fluctuations in the market. They are, after all, directly involved. While they don’t dabble in the resale market – a rather messy affair, that – the new construction sector is inextricably linked to mortgage rates. Lower rates, you see, simply encourage people to…acquire.
D.R. Horton (DHI 0.42%) is, as everyone knows, the largest homebuilder in the nation. They have a rather clever habit of focusing on more affordable homes and first-time buyers – a sensible strategy, given that these individuals are particularly sensitive to monthly payments. Lower rates, naturally, also tend to elevate home prices, which allows Horton to command a slightly higher sum for their properties. A perfectly logical arrangement, wouldn’t you agree?
2. Opendoor Technologies
Opendoor Technologies (OPEN 5.32%) may be the most exquisitely exposed company to mortgage rates and home prices on the entire exchange. One can’t help but admire their audacity, if not their judgement.
The stock has been rather volatile since its initial public offering in 2020 – a predictable outcome, really – and even enjoyed a brief moment of notoriety during last year’s…enthusiasm for certain internet stocks. Opendoor’s business model involves flipping homes and collecting associated fees, and falling mortgage rates should provide a rather welcome boost. They thrive, naturally, when home prices are on the ascent.
The company has recently been revitalized under the leadership of a new CEO, Kaz Nejatian, and two of its founders have returned to the board. A sensible move, one would think. If Opendoor can successfully capitalize on falling rates and, dare we hope, rising prices, it stands to be a rather fortunate beneficiary. One can only hope they don’t squander the opportunity.
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2026-01-20 21:22