According to a recent New York Fed report, Americans are facing increasing challenges when it comes to borrowing. More individuals are being denied loans, and fewer people are seeking loans altogether. This can be attributed to various factors such as rising interest rates, inflation, and economic uncertainty.
In June, the report indicated that the rejection rate for credit applicants rose to 21.8 percent, marking the highest level since June 2018. Notably, auto loans had the highest rejection rate at 14.2 percent, followed by credit cards at 21.5 percent.
Furthermore, the report highlighted a decline in the percentage of consumers planning to apply for loans in the next 12 months. In June, this figure dropped to 26.4 percent from 26.1 percent recorded in February.
These findings suggest that access to credit is becoming more challenging for Americans. As a result, several negative consequences may arise, including difficulties in purchasing homes, cars, and other high-value items. Additionally, businesses may struggle to secure the necessary financing for growth.
Looking ahead, the Federal Reserve is anticipated to continue raising interest rates to address inflation. Consequently, credit may become even more expensive in the upcoming months, further dampening borrowing activity.
