Yesterday the Federal Open Market Committee (FOMC), the Federal Reserve’s policymaking body, raised its target for the federal funds rate by 25 basis points. There is some chance the bond market will be convinced that the increase reduces the risk of future inflation. If so, it will lower 10-year Treasury interest rates and along with it, mortgage interest rates. But even in that case, mortgage rates remain high and the market deeply distressed.

In this environment, The Pew Charitable Trusts has released a paper entitled Mortgage Lending Standards Are Too Tight: Federal policy favors risk reduction over mortgage access for financially ready homebuyers. The strong implication is that people are unable to own a home because of bureaucratic decisions on lending standards. That’s not exactly right.

In the biggest picture, the problem is the inadequate supply of housing. Lending standards affect the demand for homes – not supply.

The report does identify a legitimate and important question about whether today’s mortgage underwriting practices make sufficiently sophisticated use of available information. Pew shows that mortgage credit has become substantially more conservative since the financial crisis. It also makes a constructive case that lenders could supplement traditional credit scores with measures such as payment histories, cash-flow data, and other indicators of financial capacity. That is a more compelling argument than simply advocating looser standards.

The report is also valuable in demonstrating that the current mortgage market is considerably less risky than the one that preceded the financial crisis, providing a reasonable basis for asking whether some additional credit risk could be accommodated.

But it is a bridge too far to argue that “today’s borrowers are unusually safe” means “there is substantial safe credit being unnecessarily withheld.” The performance of existing borrowers does not necessarily establish how the marginal lower-score borrower would perform. And having fewer mortgages to lower-score households does not demonstrate that those households were creditworthy, could afford prevailing house prices, or were actually denied a mortgage.

The housing problem is a supply problem. And no amount of mortgage machinations will solve it.