Crossroads
What bulls get WRONG on OPEN Stock!
9/1/2025, 10:39:18 PM
Economic Summary
- Mortgage rates are driven primarily by the 10‑year Treasury yield, with primary/secondary spreads adding additional basis points; therefore Fed funds cuts do not automatically translate into much lower mortgage rates.
- The Fed funds rate mainly affects lending tied to short‑term rates—credit cards and personal loans—so rate cuts benefit banks and lenders that earn net interest margin (example: SOFI).
- The 10‑year yield responds to supply/demand (US debt issuance, auctions) and macro news, so sustained declines in mortgage rates are not guaranteed even if the Fed cuts.
- The secondary spread prices prepayment and credit risk; when that spread is elevated, mortgage costs and volatility rise, reducing refinancing and origination activity for mortgage‑dependent businesses like OPEN and RKT.
Bullish
- Broad rate cuts could lift the overall stock market and boost OPEN momentum.
- Fed fund cuts widen net interest margins for lenders like SoFi (SOFI).
Bearish
- Rate cuts unlikely to meaningfully lower mortgage rates, hurting Opendoor (OPEN).
- Mortgage rates track the 10‑year Treasury yield more than the Fed funds rate.
- Elevated secondary spreads increase mortgage costs and borrower risk, reducing originations.
Bullish tickers
SOFIOPEN
Bearish tickers
OPENRKT
OPEN
1 price targets
83
Bullish
Can still rally as a momentum/meme trade when broader markets rise after Fed cuts.
Bearish
Mortgage rates are tied to the 10‑year Treasury and elevated spreads, so Fed cuts won't materially lower rates and will pressure Opendoor's mortgage‑dependent business.
SOFI
Bullish
Benefits from Fed fund cuts through wider net interest margins on personal lending and credit products.
Bearish
Lending businesses risk credit deterioration if consumer health weakens or mortgage dynamics worsen.
RKT
Bullish
Could see market‑driven uplift if overall equities rally after rate cuts, though core mortgage sensitivity remains a headwind.
Bearish
Rocket/RKT is exposed to mortgage market weakness if 10‑year yields and spreads remain high.
PHM
Bullish
Would benefit if mortgage rates fell materially and affordability improved.
Bearish
Homebuilder demand suffers when mortgage rates stay elevated because buyer affordability worsens.
FNMA
Bullish
If mortgage rates decline meaningfully, guarantee activity and related operations could increase.
Bearish
Fannie Mae operations are affected by mortgage pricing and elevated spreads that reduce volumes.
People mentioned
CrossroadsEric Jackson