Low interest rates not enough to spur mortgage applications

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.

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.