Mortgages still too difficult to obtain – Bernanke

Even creditworthy borrowers are finding it difficult to get a mortgage nowadays and it’s unlikely banks will ease their standards anytime soon, according to Ben Bernanke, chairman of the Federal Reserve.

“A return to pre-crisis lending standards wouldn’t be appropriate,” Bernanke said in referencing how banks prior to the housing crisis were issuing mortgages with little or no documentation for jobs or incomes. “However, current standards may be limiting or preventing lending to many creditworthy borrowers.”

While banks have made huge strides in improving their balance sheets and overall lending (such as for credit cards and auto loans), banks continue to be extra cautious when it comes to issuing new mortgages, Bernanke said. Even borrowers coming with a 20 percent down payment on a home purchase may face hurdles unless they have stellar credit.

The challenges of getting a mortgage have been cited by real estate professionals and economists as one of the biggest obstacles standing in the way of a full housing recovery.

An estimated 10 to 20 percent of creditworthy homebuyers are being locked out of the housing market because of tightened credit conditions, U.S. Housing Secretary Shaun Donovan told Reuters.