Americans are facing an increasing level of rejection on their loan applications, according to data released by the Federal Reserve Bank of New York.
In the New York Fed’s latest Survey of Consumer Expectations, the overall rejection rate for credit applicants was 21.8% in June, up from the 17.3% rate in the last survey published in February and the highest level since June 2018. Lenders were equal opportunity rejecters, with the New York Fed observing that the denial of credit applications “was broad-based across age groups and highest among those with credit scores below 680.”
The rejection rate for mortgages in June was 13.2%, up from 10% in February, while mortgage refinancing rejection was 20.8%, up from 16.3% four months earlier. The 14.2% rejection rate for auto loans was the highest recorded in the survey’s 10-year history.
“The average reported probability that a loan application will be rejected increased sharply for all loan types,” said the New York Fed’s report. “It rose to 30.7% for auto loans, 32.8% for credit cards, 42.4% for credit limit increase requests, 46.1% for mortgages, and 29.6% for mortgage refinance applications. The readings for auto loans, mortgages, and credit card limit increase requests are all new series highs.”