New York, NY, United States (4E) – JP Morgan Chase chief executive Jamie Dimon on Friday that the U.S. housing market “has turned the corner”.
Dimon’s remarks came after he announced his company’s third quarter earnings rose by 34 per cent to $5.7bn. He added that he expects interest rates to rise some time next year as the economy improves further, even though the Federal Reserve has said that it is keeping near-zero interest rates through 2015.
Earlier this week, a Fed survey found signs of improving housing market across the country boosting economic growth. It shows rising home sales, steady rise in home prices and increasing confidence by builders about the outlook of the market.
The housing market collapse in the U.S. triggered the banking crisis in four years ago that resulted to the global economic downturn.
Dimon acknowledges that JP Morgan’s portfolio of souring mortgage loans remains high, and expects the banks would need to deal with default-related expenses “for a while.” He says that the bank continues to work in modifying these loans as many homeowners still cannot afford to pay their mortgages.
The low interest rates in the third quarter allowed more U.S. homeowners to acquire new mortgages and refinance existing ones, increasing the banks’ income. The Fed’s quantitative easing policy to buy mortgage-backed securities (MBS) boosted the banks’ earnings by bringing higher spreads between what customers pay for new mortgages and MBS rates.