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Mortgage lending holds up US Fed’s work to spur economy

US Federal Reserve Chairman Ben S. Bernanke said the central bank’s efforts to spur economic growth are being stalled by impediments to mortgage lending, and he called for further steps to heal the housing market.

“We have helped lower mortgage rates to the lowest point in many, many decades,” Mr. Bernanke told homebuilders Friday in Orlando, Florida. “Yet we are not seeing as much activity as we would like to see.”

Mr. Bernanke, who repeated that the pace of the recovery has been “frustratingly slow,” did not discuss the outlook for monetary policy.

He devoted part of his speech to recommendations from a Fed study on housing that was sent to Congress last month and which prompted criticism from some lawmakers, who said the Fed has overstepped its authority.

“The state of housing and mortgage markets may also be holding back the recovery of our financial system and the normalization of credit conditions,” Chairman Bernanke said today to the National Association of Homebuilders International Builders’ Show.

Referring to the high standards of lenders following the housing bust, Mr. Bernanke said that “some tightening was necessary.”

“That being said, the pendulum has probably swung too far in the other direction by this time,” he said. “Conditions are still too tight for the health of both the financial system, for the construction industry and for our economy.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

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