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Low interest rates not enough to spur mortgage applications

Posted August 5, 2010

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— Mortgage rates are lower than they've ever been, but getting a loan is harder than in previous years as well.

The average interest rate for a 30-year, fixed-rate loan dropped to 4.49 percent on Thursday, the lowest since the government started keeping records. A 15-year, fixed-rate mortgage dropped to 3.95 percent, which officials said also was a record low.

Lenders are quick to say that that money is there for buyers with good credit, but the rules have changed in the wake of the housing market meltdown of two years ago. Instead of a 680 credit score, it now takes a 740 to obtain the best rates.

Underwriters also dig into applicants' financial history like never before. Lenders demand proof for every dollar, and any bad check or past overdrawn account raises a red flag.

"Any little hiccup that might appear on someone's credit report or bank statement, these things have to be explained to the underwriter," said Carl Kiger, a loan officer for PrimeLending in Cary.

Robin Snyder, who wants to buy a condominium in Cary, said obtaining a mortgage is more complicated than in the past.

"There's no doubt about it. We definitely had to show more paperwork this go around," Snyder said.

Mortgage generic, home sale, house for sale generic Getting a mortgage harder than in recent years

Despite the low interest rates, Kiger said, the activity level on new mortgages remains stagnant. Refinancing activity is good, but is down from a year ago, when tax credits enticed many people to take out new mortgages.

"There hasn't been a better time probably in 50 years to go out and buy a home because rates are so low," he said. "I just think (the problem) is a lack of confidence in the economy."

Realtor Kelly Cobb said she thinks banks have tightened up too much and have made it difficult for people who want a mortgage.

"I think the banks are running scared because of the last couple years. They were giving away money a little too freely," Cobb said.

Kiger said home buyers with good credit and extra patience will find loans and plenty of willing sellers. People need to get their credit and paperwork in order before applying for a loan, he said.

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  • nighthunter Aug 6, 2010

    And then there are those that have qualified for extensions and refinance and provided the bank with timely paperwork which the bank either "loses" or ignores. About the time the property has been on the market for 6 months to a year, they might figure out that foreclosure was NOT the option they really should have gone with.

  • Rebelyell55 Aug 6, 2010

    Now that the banks have screwed everyone they can. (yes were stupid enough to let them), they are trying get dollars anywhere they can. Remember that in another few weeks you'll hear about the increase in foreclosure. Oh wait that was two weeks ago. People aren't stupid. Most know we are heading back into a recession in the next few month.

  • FairPlay Aug 6, 2010

    Duh!!! No jobs, no money to buy houses!

    Obamachange ? Not

  • WXYZ Aug 6, 2010

    No New TaXES OR Government FEES! Lower all employer taxes and fees! Stop all new government social programs! Raise the value of the dollar and raise the interest rates! Stop the government from competing with the private sector! Stop all government programs which kill jobs in the private sector, e.g. "ObamaCare", "Financial Reform", "Cap and Trade". Stop all government giveaways to "special groups": e.g. "cash for clunkers" and "first time homebuyers tax credit" and "bailouts". The Obamination Administration and it's Yellow-Dog-Rubber Stamp-Socialist-Democrat Congress have done more damage in less time to our economy and the American way of life than any other in the last century. All of this Change and killed most of the Hope in America. We must all hope and pray that the elections this November, will bring about the "change" across the political spectrum that is sorely needed: Socialists Out and Conservatives In---especially those that will oppose Obama!

  • Nobody but Carolina Aug 6, 2010

    I, at least, plan on checking with my lender to see what up front costs are gonna be and how many hoops I'll have to jump through. I ran a quick estimate and at about what I could get on a 15 year fixed, I'd drop about 6 years off the terms and my payment would reduce about $15.

  • meh2 Aug 5, 2010

    Hope and change, baby!

  • mike2 Aug 5, 2010

    And Lord yes, some of us who have had perfect credit for 40 years are still refused because we were late once or twice on a credit card payment.

    The economy, and THIS ADMINISTRATION, both in D.C. and Raleigh are NO HELP to us. I am not spending because I don't know how much my HEALTH INSURANCE is going to be....My taxes on my small business...and I am not sure this COUNTRY we all love is going to survive the OBAMANATION administration. God help us all.

  • no contest Aug 5, 2010

    Let's see here. Some people don't have jobs. Some people have jobs and are unsure of the economy so they just want to sit tight. Business owners don't know what the future holds for taxes, regulations or business lending and current employees know this.

    When I bought my first home the lady at the bank called me all excited because interest rates had just dropped out of the teens. My 15 year ARM interest went down FROM 12.7 percent every year until I sold. Reagan was in office and the economy was starting to pick up. People knew there were better days ahead. People don't know if there are better days ahead now!!

  • mep Aug 5, 2010

    So apparently people need to have good credit, the ability to pay back the loan, and an income. What a novel idea! Now get rid of Fannie & Freddie and the system might work like it is suppose to. Sure, not EVERYONE will own a home... but those are the facts of life.

  • Daisygirlforever Aug 5, 2010

    yes, because of the fees that cost up to $4000 to refinance. once the these fees are comped, or at least some of the unnecessaery fees, such as appraisal fees, are waived, then ppl are not going to refi.