St Casimirs Mortgage Minute

Fed's Duke Optimistic About Housing Recovery

The housing recovery is likely to strengthen as the economy improves and triggers pent-up demand, Federal Reserve Governor Elizabeth Duke said Friday at a Mortgage Bankers Association conference in Avon, Colo.

"I am optimistic that the housing recovery will continue to take root and expand," Duke said. "While low mortgage rates are helping support the recovery, I believe it will be the pent-up demand of household formation unleashed by improving economic conditions that will provide real momentum."

She warned, however, that tight credit conditions could slow that impetus. "[T]he strength of this momentum will be determined by credit availability to these new households, an availability that may be much slower to return as mortgage market participants assess the regulatory, market, and economic environment," Duke said.

"I think that if such credit is not readily available, the housing recovery will still continue, but the mix of owner-occupied and rental housing and the level of mortgage originations might be quite different," she explained.

--ABA Daily Newsbytes