This is what one of the mortgage brokers that we work with is saying about the current loan market when it comes to liquidity as of today 9.26.08:

Banks are still definitely lending.  We’ve seen a continuing tightening of guidelines on who’s getting the loans, but as long as the clients are well-qualified and have at least 20% down (25% if the price is $1 million or more), we’re not having any trouble finding good loans for them.  Some banks are still offering rates in the 5% range on ARM loans, so there’s still good options out there.  For the type of clientele you guys typically deal with ( $750,000-$2.5M ) , the tightening of the guidelines aren’t really affecting people.  As a perfect example, Sammy Haeger got a 7-year interest-only loan at 5.875%!  That rate has gone up a bit since, but he was a very well qualified buyer and there were plenty of banks that wanted to lend to him.   The one thing that’s up in the air right now is the temporary conforming limits.  As part of the government stimulus package that was released about 6 months ago, they are allowing Fannie Mae and Freddie Mac to purchase loans up to $729,750 whereas they could previously only purchase loans up to $417k.  This has opened up good interest rate opportunities for anyone financing between $417k and $729k.  That package expires at the end of this year and no new plan has been announced yet.  I’ve heard rumors that they may increase the permanent conforming limit from $417k to around $650k, but that’s all hearsay at this point because nothing formal has been announced.  So, that’s one thing we’re keeping a close eye on because without that, people in that price/loan amount range are going to have a tougher time getting good terms unless they are extremely well-qualified (i.e. 25% or more down, tons of post-closing reserves, etc…).  I’m sure that the government will do something about this at some point, but we’re only 3 months from the end of the year and we’ve heard basically nothing about what they are going to do.  It’s going to be an interesting few months for sure!