The US housing market was ‘at the core’ when the 2007-2009 financial crisis erupted and although the last few months have indicated ‘the sector is on the mend’, Federal Reserve Chairman Ben Bernanke has said recently that the latter is nonetheless, ‘far from being out of the woods’‘Although there are good reasons to be encouraged by the recent direction of the housing market, we should not be satisfied with the progress we have seen so far’, he said during his speech at the Operation HOPE Global Financial Dignity Summit. Bernanke argued that the ‘overly tight lending standards’ is one factor that is contributing to this consistent instability.
While acknowledging that these tight lending standards were ‘an appropriate response’ when the housing bubble erupted, it ‘seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery’.
Bernanke has affirmed that the Fed will not stop supporting the housing market, however, he ‘avoided policy specifics’. What he did say was that Americans are still anxious ‘over the labour market, housing process, and the economy in general’ which leads to them postponing the buying of property.
‘For the first time in a number of years, the housing sector is improving, adding to growth and jobs’ Bernanke added, ‘but the housing revival still faces significant obstacles, and the benefits of that revival remain quite uneven’.