Many Homebuyers Unable to Get Loans Despite Low Mortgage Rates

By Kyle Chezum Updated on 4/5/2011

The story has been unending and unchanging.  Mortgage rates are at historic lows.  Though they've been increasing since the start of the current year and have bumped up against the 5% mark on more than one occasion, rates have remained incredibly low and, to this day, are comparatively among the lowest in this nation's history.

Despite this trend of low cost financing, very few homebuyers have been able to take advantage of these rates for one simple reason.  Banks have clamped down on lending practices and tightened loan requirements.  They simply aren't making as many loans as they used to, and when they do, the loans come at a significant price.

It's an established fact that most lenders are now requiring down payments of at least 20%.  Some are requiring 30%.  If you want those low interest rates you've been hearing about, you'll have to pony up this money.  Homebuyers who put down less than 20% up front may find themselves getting rates as high as 5.375% and above to compensate for the assumed risk.  Often, first time home buyers and other less qualified buyers aren't able to take advantage of the low interest rates due to this obstacle.

Yes, interest rates are low.  Yes, this is an extremely good time to buy a home.  But don't ;et the hype fool you.  Many homebuyers are struggling to qualify for mortgages that come with these low rates.  Time will tell whether lending standards continue to tighten or instead begin to loosen sometime this year.