Bernanke: Fed worries about tight lending standards | Pound Ridge Real Estate

The Federal Reserve worries the tightening of mortgage credit has gone too far and is now working on policies to ease lending fears, Fed Chairman Ben Bernanke said Wednesday. 

After the Federal Open Market Committee verified its continued commitment to acquiring mortgage-backed securities and Treasuries at the same pace, Bernanke told reporters the Fed is seeing “much higher credit-quality requirements” from potential borrowers.

Yet, he worries any concerns over “put-backs that banks may have — and uncertainties about regulation — have tightened the mortgage credit box more than desirable.”

Still, the Fed Chair said one of the key tools in combating tight lending is the lowering of mortgage rates by keeping the Fed’s federal funds rate near zero.

“I would say one thing is that as the housing industry has strengthened and home prices have gone up, that has brought some people into the credit box,” Bernanke said.

As people build more equity or pull themselves above water, they become more creditworthy and increase their options, Bernanke suggested.

kpanchuk@housingwire.com

• Printer-friendly version

• Send to friend