also been hindered by the steep descent of house prices. to date, house prices have fallen by nearly one - third from their peak ( chart 23 ), pushing home equity as a share of personal income to its lowest level on record ( chart 24 ) and wiping out $ 7 trillion of housing equity. further, this decline in housing wealth – and the associated hit to consumer confidence – has not only been a meaningful and persistent drag on overall consumer spending, it has also been enough to push nearly 12 million homeowners underwater on their mortgages, that is their houses are now worth less than their mortgage balances ( chart 25 ). without equity in their homes, many households who have suffered hardships such as unemployment or unexpected illness have been unable to resolve mortgage payment problems through refinancing their mortgages or selling their homes. the resulting mortgage delinquencies have ended in all too many cases in foreclosure, dislocation, and personal hardship. neighborhoods and communities have also suffered profoundly from the onslaught of foreclosures, as the neglect and deterioration that frequently accompany vacant properties makes neighborhoods less desirable places to live and may put further downward pressure on house prices. 2 the problems that led to the mortgage crisis and the potential policy solutions to those problems are numerous and varied. even though time does not permit a full discussion of them here, i do believe that forceful and effective housing policies have the potential to significantly influence the speed and strength of our economic recovery. the federal see, for example, john y. campbell, stefano giglio, and parag pathak ( 2011 ), “ forced sales and house prices, ” american economic review, vol. 101 ( 15 ), pp. 2108 – 31 ; and john p. harding, eric rosenblatt, and vincent w. yao ( 2009 ), “ the contagion effect of foreclosed properties, ” journal of urban economics, vol. 66 ( 3 ), pp. 164 – 78. bis central bankers ’ speeches reserve has already acted to reduce mortgage rates by purchasing longer - term assets, in particular through the purchase of agency mortgage - backed securities. indeed, low rates combined with falling house prices have contributed to historically high levels of housing affordability ( chart 26 ). at the same time, rents have been rising, which should make homeownership a more attractive option relative to rental housing ( chart 27 ). despite this record affordability, home purchase and mortgage refinancing

european central bank : press conference a€ “ introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr christian noyer, vice - president of the european central bank, at the press conference, held in frankfurt am main, 30 august 2001. * * * ladies and gentlemen, i am here to report on the outcome of today's meeting of the governing council of the ecb, which was also attended by mr. reynders, president of the eu council, and mr. solbes from the european commission. following its regular examination of monetary and economic developments and analysis of their implications for the maintenance of price stability in the euro area, the governing council decided to lower the key ecb interest rates by 25 basis points. the governing council considers that the available evidence points to an improvement in the outlook for price developments. this is particularly apparent from the information under the second pillar of the ecb's monetary policy strategy, while that related to the first pillar remains consistent with a favourable outlook for price stability in the medium term. let me elaborate somewhat on the assessment provided under the two pillars of the monetary policy strategy of the ecb. with regard to the first pillar, the three - month average of the annual growth rates of m3 was 5. 9 % in the period from may to july 2001. however, this figure needs to be corrected for holdings of money market paper and short - term debt securities by non - residents of the euro area, which, according to preliminary estimates, have contributed around three - quarters of a percentage point to annual m3 growth. the increase in the rate of growth of m3 over the past few months must be interpreted carefully. it reflects the relatively flat yield curve and the recent weakness in stock markets, both of which made the holding of short - term deposits and marketable paper included in m3 attractive. as it also reflects the fact that consumers needed a higher level of transaction balances to finance the past rise in energy and food prices, recent increases in m3 growth may be transitory and, hence, do not necessarily have implications for price stability in the medium term. in addition, the annual rate of growth of loans to the private sector, although still high, has continued to decline over recent months. regarding the second pillar, there are clear signals of lower inflationary pressures from the demand side. recent data on economic activity indicate that real gdp growth in 2001 will most likely be lower than was expected a few months ago.