Ky. lenders willing, but more selective

By Jim Jordan - jjordan1@herald-leader.com

Kentucky banks have money and they are making loans, including mortgages and small business loans, bankers say.

The loan process might take longer, involve more paperwork and require a larger down payment, but bankers say borrowers can generally get the money they need.

"In many respects, it's business as usual on the borrowing side" — with one big exception, said Steve Kelly, executive vice president of Central Bank & Trust Co. "The era when you could get into a house with zero down is over."

First-time home buyers might have to make a 20 percent down payment, while those with longer histories of repaying loans on time might get the more traditional 10 percent down payment.

Borrowers should shop around for the best deals and for the bank they feel most comfortable doing business with, said Nancy Norris, spokeswoman for Chase, Lexington's largest bank.

"Loans are definitely available for consumers," Norris said.

"It's true that over the last year we have tightened our credit standards," she said. "So it is a little bit more difficult to make loans, but we are still making loans. In fact, we are doing very well in Kentucky right now."

Lenders are being cautious due to the national economy, rising unemployment, problems in the bank industry and the depressed housing market, said University of Kentucky banking professor Don Mullineaux.

"Banks are less willing to lend even to borrowers who look reasonably creditworthy," he said. "The other thing that I think is a more important signal is that they are not very willing to lend to each other."

Banks are charging premiums on loans to other banks, basically to discourage borrowing, Mullineaux said.

Kelly noted that one of the nation's largest banks, Washington Mutual, was sold recently at "a fire sale" to Chase's parent company. Such events prompt banks and their customers to be cautious.

"The customer is more reluctant to commit," he said. "Certainly we have seen that on the mortgage side."