INSUBCONTINENT EXCLUSIVE:
US consumers showed greater appetite for loans this year — driven by stronger demand for mortgages amid lower rates — and they had an
easier time accessing credit when compared to a year earlier, a survey from the New York Federal Reserve showed on Monday.
Applications for
credit rose slightly this year compared to 2018, and rejection rates declined, according to the New York Fed’s Survey of Consumer
Expectations Credit Access Survey
Applications for any kind of credit rose to 45.8 per cent on average in 2019 from 45.5 per cent in 2018
Rejection rates dropped to 17.6 per cent in 2019 from 19.9 per cent in 2018.
The greater demand for credit was driven by consumers seeking
to take advantage of lower borrowing rates to buy homes
Mortgage loan application rates rose to 7.9 per cent this year from 7.1 per cent in 2018
That corresponded with a drop in mortgage rates, with the 30-year fixed rate mortgage dropping to 3.73 per cent as of December 13, 0.9
percentage point lower than the same time last year, according to Freddie Mac
Most of those home buyers had strong credit, with credit scores higher than 680.
In contrast, applications for mortgage refinancing loans
declined slightly to 8.0 per cent this year from 8.3 per cent in 2018
Auto loan application rates also dropped to 12.6 per cent this year from 15.5 per cent last year.
Overall, consumers who applied for new
credit this year had an easier time accessing those loans
Rejection rates declined for credit cards, mortgages and mortgage refinance applications, the survey found
The main exception was auto loans, which saw rejection rates rise to an average 7.1 per cent in 2019 from 6.1 per cent in 2018.
The New York
Fed polls consumers about their credit expectations every four months and publishes one annual release summarising trends from the past
year.
The study also examines the financial fragility of US households
The perceived probability of facing a sudden expense of $2,000 in the next month rose to 33.6 per cent in 2019 from 32.9 per cent in 2018
But consumers also felt more confident in their ability to afford such a bill, with 69.8 per cent of consumers saying they would be able to
come up with $2,000, up slightly from 68.6 per cent in 2018.