Many analysts, Fed chairman Ben Bernanke among them, have criticized banks for excessive lending standards, and NAR's 2012 Profile of Home Buyers and Sellers speaks to that fact.

By Peter Ricci

Now that the real estate markets have begun a slow, steady recovery, it’s become commonplace for analysts to debate what factors are holding back housing from the rollicking, surging recovery we all dream about. From negative equity to a dwindling housing inventory, numerous topics are brought, but few are as persistent as that of tight lending standards, a topic that receives a hefty boost in credibility from the National Association of Realtor’s 2012 Profile of Home Buyers and Sellers.

Profile of Home Buyers and Sellers – Tight Home Lending in 2012

We’ll start with the most explicit data – of the many homebuyers that NAR surveyed, 40 percent reported that the mortgage application and approval process was more difficult than they had anticipated, with it being somewhat more difficult for 23 percent and much more difficult for 17 percent.

Perhaps as a result of those standards, NAR found some interesting complementary stats, including:

• Savings were still the most used resource for down payments, with 76 percent of buyers utilizing their savings.
• After that, though, 24 percent used a gift from a friend/relative, 6 percent used a loan from a relative/friend, and 17 percent used either a 401(k) fund or stocks/bonds.
• Unsurprisingly, 93 percent of entry-level buyers opted for a fixed-rate mortgage, but 46 percent of first-time buyers financed their purchase with an FHA mortgage, while 10 percent used a VA loan.
• And finally, piggy-packing off some of our earlier reporting, tight lending standards were also visible in the demographics of 2012’s homebuyers. Sixty-five percent of homebuyers were married couples, which is the highest share for that demographic since 2001, while 16 percent were single women, the lowest share for that group since 2001.

Mark Levin, a real estate broker with Keller Williams Realty in Houston, said that from 2008 to today, requirements for mortgages have become much tougher, and as a result, buyers have changed their strategies.

“Many first-time buyers have chosen to rent today to save money for a down payment and work on securing a strong credit report and substantial income,” Levin said. “Securing a pre-approval or pre-qualification letter is a very important item for home purchasing. Knowing what the buyer can qualify for will enable the real estate professional to search for those homes in the price range that the buyer has been approved or qualified for.”