Increasingly credit-hungry consumers are applying for new loans at a rate approaching pre-pandemic levels, according to new survey findings.
Some 44.8% of consumers surveyed by the Federal Reserve Bank of New York in February reported applying for one or more types of credit over the prior 12 months, up from 34.6% in October, the NY Fed said Monday. A year earlier, before the COVID-19 pandemic rocked the economy, the rate was 45.6%.
The NY Fed’s credit access survey is fielded every four months to gauge how actively consumers are seeking new types of credit (including auto loans, credit cards, credit card limit increases, mortgages, and mortgage refinancing), and whether their applications are approved.
Last year the pandemic weighed heavy on the credit market, deterring consumers from applying for cards or loans, but also limiting access to those who did apply. The latest survey found demand increased for all types of credit products, with mortgage refinancing applications seeing the biggest surge.
A record 25% of households with a mortgage (since the Fed started tracking data in October 2013) applied for refinancing in the year prior, up from 16% in October. Interest in new mortgages increased too, likely driven by record-low mortgage rates that only recently started inching back up.
Meanwhile, the rejection rate for new credit ticked up slightly, rising from 18.0% in October to 18.5% in February, the highest level recorded in more than two years. Credit card issuers were among the most cautious, with credit card applications and credit card limit increase requests having the highest rejection rates among the loan types surveyed.
Looking ahead, consumer appetite for new credit accounts is expected to increase even more. Almost 31% of respondents said they were likely to apply for one or more new credit accounts in the coming year, the biggest share since October 2014.