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Credit Tightening, Especially For Auto And Mortgage Loans

NEW YORK—Consumers are finding it is more difficult today to get a loan—especially auto and mortgage—as lenders tighten their standards, new data show.

The Federal Reserve Bank of New York’s Center for Microeconomic Data has released results from its latest Survey of Consumer Expectations (SCE) Credit Access Survey, which provides information on consumers’ experiences with, and expectations about, credit demand and credit access. The survey is fielded every four months, most recently in October 2024.

Federal_Reserve_Bank_of_New_York

The latest SCE Credit Access Survey reveals largely stable credit demand but increased rejection rates on credit applications in 2024. Reported rejection rates for credit cards, mortgages, auto loans, credit card limit extension applications, and mortgage loan refinance applications all rose in 2024, with those for auto loans and mortgage refinances reaching new series highs since the module was first fielded in 2013. The proportion of respondents reporting voluntary credit account closures dropped to a new series low, while the share experiencing lender-initiated account closures rose to a new series high, the New York Fed stated.

Looking ahead, households anticipate that they will be less likely to apply for at least one type of credit over the next 12 months. They report lower average likelihoods of applying for a new credit card or a mortgage, but higher likelihoods of applying for a mortgage refinance loan. Consumers also report higher average perceived likelihoods of a future credit application being rejected, conditional on applying over the next 12 months, for credit card, auto loan, and mortgage refinance applications, but lower expected rejection rates for mortgage applications and credit limit increase request, the New York Fed stated.

Finally, there was a slight decrease in 2024 in the subjective financial fragility of U.S. households. The average reported probability of being able to come up with $2,000 if an unexpected need arose within the next month increased slightly, the data show.

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