The Federal Reserve's survey of banks' senior loan officers, one of the most closely watched gauges of lending practices, found that the credit crunch is widening. The proportion of domestic banks tightening their standards was at or near historical highs for almost all loan categories, including credit cards and student loans…Banks continue to get more restrictive in their real-estate lending as the housing bust adds to their losses. About 70% of banks said they tightened standards for new home-equity lines of credit over the prior three months. Roughly half of the banks said they tightened terms on existing home-equity lines of credit over the past six months because of home prices falling below their appraised values. Most lenders also cited loan defaults and a change in borrowers' financial circumstances for tightening terms.More than 60% of banks tightened standards on prime mortgages, up from just over half in January and 15% a year ago. At least three out of four said they tightened standards for nontraditional and subprime mortgages in the past three months.

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So what does this mean for Maui real estate? It means that high credit quality buyers and cash buyers have a distinct advantage especially for resort properties like those in Wailea or Kapalua. It also means that the best mortgage brokers and most reliable lenders have become an increasingly important resource. For more thoughts, contact us.