Indeed, research by Federal Reserve staff finds that first-time homebuying during the past two years has been quite weak by historical standards, and that this weakness has been particularly pronounced among borrowers with lower credit scores. Understanding tight mortgage credit conditions So why is access to mortgage credit so tight?
Lenders may have tightened credit standards partly as a correction for the lax and problematic lending standards that prevailed in the years leading up to the peak in house prices. And, given the significant consequences that those lax lending standards had for many households, communities, financial institutions, and the economy, some tightening of credit standards is warranted.