Experts are predicting that the American housing market will take a long time to return to any sort of normality, due to the huge number of foreclosures and empty homes, while the proposed 20% minimum deposit threatens to limit the number of buyers able to get on the property ladder.
The vice-chairman of the US Federal reserve, Janet Yellen, has said that the recovery will be long and drawn out, and that the Fed must work hard with other agencies to help clear the current stock of vacant properties and to prevent further foreclosures.
There were around 2 million vacant homes during the first quarter of this year, and the inventory of unsold property is likely to stay high for quite some time, increasing the downward pressure on house prices.
Americans are still having considerable difficulty getting finance, and the Federal Reserve is now trying to persuade lenders that all mortgages should meet higher underwriting standards as an alternative to foreclosure. Robert Shiller, the US economist responsible for the Case Shiller index predicts that house prices could fall by a further 10% to 25% during the next five years.
A minimum 20% deposit has been proposed by six federal regulators, but angry critics say this will prevent a large percentage of the population from ever buying their own home, condemning them to rent for ever.
There are worries that the only people who will be able to get mortgages in the future will be the very wealthy, with other potential buyers being either excluded or charged higher rates.
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