Mortgages have become notoriously difficult to obtain, even among some of the most creditworthy borrowers, and lending standards are unlikely to be eased any time soon, according to Federal Reserve Chairman Ben Bernanke.
Bernanke, speaking at a Chicago banking conference last week, said that while banks have made significant progress in overall lending (taking into account other forms of finance such as auto loans and credit cards), they are consistently extra cautious with regards to mortgage finance. Lending standards have become so tough that even those with the cash to make a 20% down payment can face problems when trying to obtain credit on a home.
Acknowledging the problem, Bernanke was quick to caution that there should be no return to the days before the housing crisis, when banks were issuing mortgages to just about anyone who asked for one:
“A return to pre-crisis lending standards wouldn’t be appropriate. However, current standards may be limiting or preventing lending to many creditworthy borrowers.”
Numerous economists and real estate professionals have cited the difficulty in obtaining a mortgage as one of the biggest hurdles to cross if a full housing recovery is to materialize, reports Reuters.
According to US Housing Secretary Shaun Donovan, it’s estimated that around 10% to 20% of creditworthy buyers are unable to secure a mortgage due to the current tight lending standards at present.