Americans are increasingly getting shot down when they seek out loans, new data from the New York Fed, released yesterday, said.
The bank reported that in June, across a number of fronts, credit was the hardest to get in years, with fewer people seeking out loans, at least for now. The report’s findings were compiled as part of the New York Fed’s monthly Survey of Consumer Expectations, with respondents polled every four months about credit access issues.
The bank said that the overall rejection rate for credit applicants rose to its highest level since June 2018, and stood at 21.8%, from 17.3% in February. The bank noted the rise in the rejection rate “was broad-based across age groups and highest among those with credit scores below 680.”
Related: 6 Ways to Improve Your Credit Score
The survey also found that rejection rates for auto loans hit the highest level for a data series that goes back to 2013 and stood at 14.2%, from 9.1% in February. Rejection rates for credit cards and credit limit increases also gained ground. The rejection rate for mortgages stood at 13.2% in June from 10% in February, while the rejection rate for mortgage refinancing jumped to 20.8% last month, from 16.3% in the prior survey.
The New York Fed data arrives amid a sea of change for U.S. lending, as the Fed has pumped up its short-term target interest rate very aggressively since the spring of 2022, as it has sought to cool high levels of inflation. The Fed wants to tamper demand and a key part of that process has been to make credit harder to get, and it is widely expected to raise rates again next week.
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Market Recap Week of 7/10/2023 Through 7/14/2023