This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bernanke Positive On Housing, Uncertain on GSE Reform

NEW YORK ( TheStreet) -- Federal Reserve Chairman Ben Bernanke said he remained optimistic about the housing recovery despite the recent rise in interest rates.

In his quarterly press conference with reporters Wednesday following the release of the central bank's monetary policy statement, Bernanke said that housing was now a source of strength for the economy.

The rise in home prices has spurred the creation of construction jobs and the improvement in household wealth will support spending and consumer sentiment, he said.

The recovery in housing was one of the reasons the Fed raised its outlook for the economy and jobs in 2014 and 2015, Bernanke added. The national unemployment rate, for instance, is now projected to drop to 6.5% by the end of 2014 compared to an earlier estimate of 6.8%.

Bernanke told reporters he is not too worried that the recent rise in interest rates will hurt demand for housing.

"People are more optimistic about housing and expect home prices to rise...that compensates for slightly higher mortgage rates," he said.

The chairman added that the recent move in interest rates has not had a dramatic impact on monthly mortgage payments.

According to Bernanke, if interest rates rise for the "right reasons" - due to optimism about the economy and expectations regarding future monetary policy -- "that is a good thing, not a bad thing."

Bernanke also touched on the issue of housing reform in his exchange with reporters. A number of bills are being floated in Congress that look to eliminate Fannie Mae (FNMA) and Freddie Mac (FMCC), also known as the government sponsored enterprises, or GSEs.

Increasingly, the proposals are backing away from a completely private model to a hybrid one, where private capital takes the first hit on losses, but the government still provides some sort of a backstop in the event of catastrophic losses.

In response to a question on whether a government backstop was necessary for a well-functioning mortgage market, Bernanke noted that other countries had a different structure and still managed to have the same levels of homeownership.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $129.70 3.60%
FB $79.42 0.83%
GOOG $539.45 0.39%
TSLA $227.88 0.81%
YHOO $42.51 -0.13%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs