Congress' dramatic rejection of the Bush administration's $700 billion economic rescue plan and the largest single-day point decline in the U.S. stock market caps a year-and-a-half long slide in the U.S. mortgage markets that saw the demise of the Hawai'i subprime market and tightening in the local high-end mortgage market.

But whether the nation's credit turmoil will have an extensive impact on local middle-class homebuyers will depend on how long it takes the federal government to implement its bailout and how far-reaching the reforms are, analysts say.

"If we don't get some sort of effort to successfully revive the credit markets, things could get worse," said Greg McBride, senior financial analyst with Florida-based www.Bankrate.com.

Already, local homebuyers are subject to tighter lending standards and have to come up with larger down payments.

Hawai'i buyers who are financing their purchases with jumbo mortgages of $793,750 or more are having to pay higher interest rates and are finding such loans less available.

The zero-down loans and low-teaser rate, subprime loans are all but gone.

"(Lenders) have gone from being incredibly lax to incredibly tight," said Wendy Burkholder, executive director of Consumer Credit Counseling Service of Hawaii.

"Even with reasonable credit scores, people can't get financing lined up."

The latest crises on Wall Street and the financial markets are a big worry for anyone who has invested in the financial markets for their pensions or savings, said Gary Fujitani, executive director of the Hawaii Banker's Association.

But local consumers haven't felt the sting as badly as homebuyers on the Mainland.

Local first-time buyers can still find low down-payment loans in the 3 percent to 3.5 percent range,

And while rates on 30-year fixed mortgages may have inched upward to about 6.25 percent, Fujitani believes they're still attractive compared to historical interest rates.

"The impacts have been more dramatic on the higher end," said Lisa Tarumoto, president of the Mortgage Bankers Association of Hawaii.

"There's still financing out there."

According to Fujitani, local homebuyers and banks tend to be conservative and many shunned the exotic adjustable-rate mortgages and subprime products that got Mainland buyers and financial institutions in trouble.

Hawai'i banks also remain well-capitalized and are considered to be very healthy by the federal regulatory agencies.

"During these trying times, it has served us well. We can take care of our community's legitimate financing needs," Fujitani said.

Pearl City resident Luci Dunphy said she bailed out of her adjustable-rate mortgage in April after interest payments on her loan increased from $1,400 a month to about $2,200 a month.

Dunphy said she refinanced her home with an ARM from Ameriquest Mortgage Co. in 2006 that adjusted upward earlier this year. When she complained to the lender, Ameriquest officials told her that they should have expected the increased payments when they signed the loan papers.

Dunphy said she was able to sell the home just days before the bank began foreclosure proceedings.

Dunphy was among thousands of local residents who received a loan from Ameriquest, which paid more than $325 million to settle a lawsuit from state regulators who accused the company of deceptive lending practices.

"We got screwed," said Dunphy, who now rents a home in Pearl City. "I would like to buy a house but now is not the right time."