Mortgage rates remain low as EVER!!

Imagine walking into a room full of all your bosses and announcing that you just lost 2 billion dollars for the company and it was all because of taking financial risks that you had no busy taking….CEO Jamie Dimon of J.P. Morgan Chase announced on Thursday that the company lost this extraordinary amount of money because there Chief Investment Officer Ina Drew took “flawed positions” on certain investments.  Simply put, Drew bet on things that the company had no business betting on. Additionally, there are expectations that another 1 billion will be lost in the next quarter.

The biggest irony of the story is that J.P. Morgan Chase is one of the companies lobbying to have a federal law loosened that bans these types of companies from  making bets with their own money.  Mr. Dimon, when my child used to come home later than he was supposed to, he would then argue that he needed to be allowed to come home later.  However since he couldn’t follow the first rule, why in the world would I give him even more freedom?  (Good luck getting the Fed’s to allow you to “lose”, I mean” bet” even more money).

Mortgage rates continue to remain at record lows and buyers seem to be responding to it.  The Mortgage Bankers Association reported this week a nice increase of 3.4% in purchase activity.  Refinances  increased a smaller 1.3%.

Sentiment in many real estate markets around the country is that the combination of low home prices with incredibly affordable mortgage rates is making the time perfect to act on purchasing.  In addition, many markets around the country are beginning to see housing inventories drop which is creating upward pressure on home prices in certain areas.  Ever since the banks had to revamp their foreclosure practices, the amount of foreclosed homes coming on the market has dropped significantly which can further impact home prices.  Less inventory creates more demand.

The stock market has been taking it hard this week in that many investors are becoming more concerned about more financial trouble in Europe.  The stock averages have been declining throughout the week however the losses have not been overwhelming indicating that although there is concern, panic has not set in.

Gas prices have dropped approximately 20 cents in the last 30 days giving drivers a reprieve at the pumps.  What is exceptionally gratifying is that typically gas prices will peak in late May just as the country is heading into the summer driving season.

Inflation on the wholesale level remained unchanged this past month indicating that inflation remains completely in control.  The financial uncertainty in Europe combined with concerns about corporate profits here in the U.S. continue to keep many investors on the sidelines and others putting their money into government bonds which is what is keeping mortgage rates amazingly low.

This week was a quiet week for economic data.  Next week we may see more volatility as we begin to receive the first of many housing reports to be released in the next week and a half.  I have predicted in the past that we would see housing numbers improve however I am giving up my predictions for the time being.  Simple reason, is because my predictions have not been all that accurate, and I can find so many other ways to embarrass myself, I don’t need to do it by making bad predictions or bets.  (Hmm, maybe there is a job opening at J.P. Morgan chase for me).

JJ Mack