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We wanted to highlight the 4.75% interest rate that JPMorgan Chase is advertising on their website for 30-year mortgages today. This is in conjunction with Freddie Mac reporting yesterday that market for 3-year fixed rate mortgages had reached 5.01%, down from a 5.10% a week earlier. This is the lowest rate going back to 1971, which is as far as the data is kept.

While low mortgage rates does not necessarily tell us how many mortgages are being approved, the declining interest rates do imply that credit is getting “unstuck” and that banks are underwriting mortgages. On the margin, this is obviously positive for the consumer and, if the velocity picks, up will clearly be positive for home values.

We’ve lightened up our Trade on consumer stocks over the last week or so because our quantitative models were flashing an overbought signal, but clearly the Trend of an improving consumer environment is supported by this mortgage data.

Daryl G. Jones
Managing Director