An ‘open house’ flag is displayed outside a single family home on September 22 in Los Angeles, California.
JPMorgan Chase CEO Jamie Dimon made waves in a CNBC interview earlier this week when he made gloomy comments about the global economy and potential recession for the United States. But the bank’s chief financial officer isn’t too worried about the possibility of a major housing meltdown leading to another downturn.
During a conference call with reporters Friday morning following the bank’s earnings release, JPMorgan Chase CFO Jeremy Barnum said in response to a question from CNN Business that he is “not expecting a big crash” in housing along the lines of what happened during the Great Recession of the late 2000s.
The bank’s home lending revenue plunged 34% from a year ago, due primarily to the super spike in interest rates leading to a slowdown in demand for mortgages.
“This is not surprising given the dramatic change in mortgage rates,” he said, adding that in the “very recent past, we were celebrating fantastic results.”
In other words, the housing market is cyclical and the bank isn’t too concerned about the ebbs and flows. Barnum also noted that, unlike in 2008, lending standards have tightened. And the fact that real estate prices have surged so much in recent years means that existing homeowners have a healthy financial cushion.
Dimon alluded to this as well in response to another question about his recession worries.
“It’s clear that the US consumer is very strong and spending money,” he said. “Even if we go into a recession, we’re going in with a healthy consumer.”