While turnover in the housing market remains low, credit growth is likely to remain low, even as prices pick up. Households may be more conservative in their willingness to borrow given low income growth. Lenders are applying tighter standards than in the past. Both of these may well combine to result in a more muted pick-up in lending than in the past.
Financial stability, nevertheless, remains to some extent, fragile in many economies, including those emerging-market economies hardest hit by the crisis. Advanced economies, in particular, are still faced with the challenge of repairing damaged financial systems, on the one hand, and introducing regulatory reform, on the other.