The Federal Reserve Bank of New York has released its latest Survey of Consumer Expectations (SCE) Credit Access, revealing consumer credit was harder to obtain in 2024. Conducted every four months, the survey provides insights into consumers' experiences and expectations regarding credit.
In 2024, credit demand remained stable, but rejection rates for credit applications increased. Rejection rates for auto loans and mortgage refinances have reached new highs since the survey began in 2013. Additionally, voluntary credit account closures hit a series low, while lender-initiated closures reached a new high.
Looking ahead, households anticipate applying for fewer types of credit over the next 12 months. They expect a lower likelihood of applying for new credit cards or mortgages but foresee a higher likelihood of applying for mortgage refinance loans.
Consumers also anticipate higher rejection rates for future credit applications, particularly for credit cards, auto loans, and mortgage refinances, although they expect lower rejection rates for mortgages and credit limit increase requests.
The survey also highlighted a slight decrease in the financial fragility of U.S. households. The probability of being able to come up with $2,000 for an unexpected expense increased slightly in 2024.
Key findings
Key findings from the survey include:
The overall application rate for credit in 2024 was 42.1%, slightly above 2023's rate of 41.2% but below the pre-pandemic level of 45.8%. Application rates for those under 60 remained below pre-pandemic levels.
Rejection rates rose to 21% in 2024, up from 20.1% in 2023 and 18.0% in 2022, surpassing the 2019 level of 17.6%. This increase was especially pronounced for individuals with credit scores under 680.
The share of respondents discouraged from applying for credit due to expected rejection increased to 6% in 2024, up from 5.2% in 2023.
Based on the survey results, Fed researchers said they expect a 24.1% drop in credit applications next year by consumers with credit scores between 680 and 760. On the other hand, they expect to see an increase in mortgage applications.
The Fed also expects an increase in future credit application rejections for credit cards, auto loans, and mortgage refinances. Overall, the survey indicates a challenging credit environment in 2024, with increased rejection rates and cautious consumer expectations.