Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Fed’s Duke Says ‘Impaired’ Mortgage Market Holding Back Growth

Federal Reserve Governor Elizabeth Duke said slow improvement in housing and mortgage markets has impeded the benefit from record-low interest rates to U.S. economic growth.

“The failure of the housing market to respond to lower interest rates as vigorously as it has in the past indicates that factors other than financial conditions may be restraining improvement in mortgage credit and housing market conditions and thus impeding the economic recovery,” Duke said in prepared testimony, obtained by Bloomberg News, for a Senate Banking Committee hearing tomorrow.

U.S. unemployment is persisting above 8 percent even after the Fed has held the main interest rate close to zero for more than three years and purchased $2.3 trillion in bonds.

Duke, in her remarks, drew from a Fed study on the U.S. housing market for Congress last month. In a cover letter to that study, Fed Chairman Ben S. Bernanke said that “restoring the health of the housing market is a necessary part of a broader strategy for economic recovery.”

The Fed chairman said policies that would help resolve the slumping housing market could include programs to ease the conversion of foreclosed properties to rental properties. Avoiding foreclosure through “a broad menu” of loan modifications could also help minimize foreclosures, he said.

“The problems in the housing market are a cause of the downturn as well as a consequence of it,” Duke said, adding “the housing market remains a significant drag on the U.S. economy.”

Sparked Recession

More Americans than forecast signed contracts to buy previously owned homes in January, indicating the industry that sparked the last recession is improving. The index of pending home resales climbed 2 percent last month, the National Association of Realtors said today.

Purchases of new homes in the U.S. exceeded forecasts in January after climbing a month earlier to a one-year high, more evidence the housing market is stabilizing. Sales were 321,000 at an annual pace, according to a Commerce Department report last week, beating the median estimate of 77 economists surveyed by Bloomberg News who called for 315,000.

Confidence among U.S. homebuilders rose in February to the highest level since May 2007 as sales and buyer traffic improved, according to the National Association of Home Builders/Wells Fargo sentiment gauge.

“The Federal Reserve will continue to use its policy tools to support the economic recovery and carry out its dual mandate to foster maximum employment in the context of price stability,” Duke said.

“In its supervisory capacity, the Federal Reserve will continue to encourage lenders to find ways to maintain prudent lending standards while serving creditworthy borrowers,” she said.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.