When will it be easy to borrow again?

Despite aggressive Fed rate cuts, interest rates on 30-year fixed-rate mortgages have dropped, on average, by only about half a percentage point since last September. Rates on auto loans and credit cards have fallen even less. And more lenders are now reducing or completely freezing homeowners' ability to tap into their home equity, even for people with good credit.

You can blame this state of affairs on the ongoing credit crisis. Burned by the bad loans they made during the housing bubble, lenders are now looking at mortgages and other loans as far riskier than they did just recently. As a result, they're less inclined to lend in the first place. When will this freeze thaw?

What to watch: Credit experts say to keep a close eye on the three-month "TED spread." This is the difference between the interest rate at which banks borrow from one another (known as Libor) and the rate on three-month Treasury bills.

Since T-bills are essentially risk-free, the higher the TED spread, the more fearful banks are about lending. And if they're skittish about lending to one another, they're certainly not going to fall over themselves to lend money to you.

What it's saying now: More tight credit. The TED spread stands at 1.68%, far above historic levels. Kathy Bostjancic, a senior economist at Merrill Lynch, says the TED spread needs to come down to about 0.40% "before we can say the coast is clear." to keep track.

You can calculate the TED spread at Bankrate.com. Search for the three-month Libor rate and the three-month T-bill rate. Subtract the T-bill rate from Libor and you've got it.

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