Federal Reserve Chairman Ben Bernanke said on Thursday that FRS is apt to continue it`s monetary policy to support the recovery of housing sector as it will boost the growth of the economy, further investments and help the labor market to improve. The pick up of housing market is "far from being out of the woods," as too tight lending standards are part of the problem - concluded Bernanke.
The Fed, which has focused on mortgage bonds in its latest round of asset purchases, will continue to do what it can to support the housing market, Bernanke said in a speech that avoided policy specifics. "However, 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 said. Housing usually leads the U.S. economy out of recession, but the vast equity losses have stymied the market.
Bernanke said Americans remain worried over the labor market, housing prices, and the economy in general, which in turn is keeping potential home buyers on the sidelines. Unfortunately, problems in the sector are disproportionately affecting lower-income and minority communities, he added.
"For the first time in a number of years, the housing sector is improving, adding to growth and jobs," Bernanke said. "But the housing revival still faces significant obstacles, and the benefits of that revival remain quite uneven."