Opendoor CEO says his firm is offering mortgages at 4.99%. Some are puzzled how.

By Steve Goldstein

Opendoor says it's offering 4.99% mortgage rates.

The chief executive of Opendoor Technologies says his company is offering mortgages a full percentage point below the national average, a move that puzzles some observers wondering about its effect on the company's business.

In a post on X, CEO Kaz Nejatian says it's offering 4.99% mortgages to buyers who use Opendoor (OPEN), the company that buys and flips homes online. The average 30-year fixed-rate mortgage was 5.98% in the week ending Feb. 26, according to Freddie Mac.

"The product is in beta still. We have a lot to learn. Going well. Very early days," he said.

In a subsequent post, he added there are no "points," the term used for upfront fees that can be used as a way to reduce the mortgage rate. He also clarified the product is only for homes bought on Opendoor's platform.

The social-media post drew a puzzled reaction as to how Opendoor can afford to offer such financing.

One investor, Orange Capital's Daniel Lewis, said Opendoor is either buying homes 4% below market price, selling them 4% above the market, or "absorbing a real hit to [return on equity] and balance sheet."

The stock slumped 7% on Monday and has dropped 13% this year. It's still up some 878% from last June.

-Steve Goldstein

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