Although the real estate market has shown steady signs of improvement, Federal Reserve chairman Ben Bernanke believes that strict mortgage lending has prevented further recovery.
"Lenders began tightening mortgage credit standards in 2007 and have not significantly eased standards since," he said, citing the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices. "Terms and standards have tightened most for borrowers with low credit scores and with less money available for a down payment."
The need for stricter standards was apparent after the mortgage crisis, but they have yet to loosen since then. Bernanke said that the fact that standards haven't improved could be keeping creditworthy buyers out of the home buying market.
This has affected the younger generation the most, as they typically don't have the credit history to show they are able to take on a mortgage. According to Fannie Mae's latest Housing Insights paper, the homeownership rate has declined for Americans from 25 to 44 years of age in each of the last five years. The only demographic that saw an increase was the 75 years and older group.