Key facts
- The rate of Americans applying for any type of credit in the past year reached its highest level since October 2021 in June.
- The overall rejection rate for credit applications increased slightly to 16.1% in June.
- The likelihood of needing $2,000 for an unexpected expense rose to 34% in June.
- Expectations for future credit availability worsened slightly, with more respondents anticipating difficulty obtaining credit.
Americans' applications for new credit over the past year reached their highest level in nearly five years in June, according to new data from the Federal Reserve Bank of New York. The findings, based on the latest Survey of Consumer Expectations Credit Access Survey, indicate the application rate for any type of credit was at its highest point since October 2021.
While the overall likelihood of applying for new credit increased, specific application types saw varied trends. The average likelihood of applying for a mortgage rose slightly, whereas applications for new credit cards, auto loans, and higher credit card limits saw a modest decline compared to February readings. Despite the increase in application rates, the average perceived likelihood of an application rejection decreased across all credit types.
The survey also revealed an uptick in consumers' perceived need for emergency funds. The likelihood of needing to come up with $2,000 for an unexpected expense within the next month increased to 34% in June, a slight rise from February but lower than the 36% reported in June of the previous year. However, the average likelihood of being able to secure these funds increased slightly to 66%.
Furthermore, expectations regarding future credit availability have slightly deteriorated, with a larger share of respondents anticipating that obtaining credit will become more difficult in the year ahead. This comes as median inflation expectations at the one-year ahead horizon increased to 3.7% in June, the highest since September 2023.