Credit-card application rates remained strong this year at an average of 26.7% — 3.6 percentage points above the average rate for 2021 — amid large increases in balances and record-high credit-card rates, a survey released Monday from the Federal Reserve Bank of New York showed.
Otherwise, demand for consumer credit largely softened or remained stable this year, and rejection rates rose slightly on credit applications with the exception of new credit cards, according to the New York Fed’s Survey of Consumer Expectations Credit Access Survey. The average application rate for any kind of credit in 2022, 44.8%, was slightly lower than 2021’s 45.6% and the pre-pandemic 2019 rate of 45.8%.
Current application rates for people with credit scores below 680, which rebounded last year, also remain lower than pre-pandemic levels — though current applications are higher with credit scores above 760, the New York Fed said. And consumers reported a slightly lower likelihood for applying for at least one type of credit over the next 12 months, at 26.7% for 2022 overall compared to last year’s 29.5%, driven by those with credit scores lower than 680.
That’s while households further reported a slightly lower probability of needing $2,000 for an unexpected expense in the next month when compared to last year, and a lower probability of being able to come up with that amount of money if they needed it.
“Looking ahead over the next 12 months, households anticipate they will be less likely to apply for an auto loan, mortgage, or mortgage-refinance loan, but report a higher average likelihood of applying for a credit card or credit-card limit increase,” the New York Fed said in a statement. “Consumers expect some easing in credit standards, reporting slightly lower average perceived likelihoods of a future credit application being rejected, conditional on applying over the next 12 months.”
The mortgage-loan application rate slid to 6.7% in October 2022 from 8.5% in October 2021 as rates soared, and the average application rate for this year overall, at 7.2%, was 0.8 percentage points lower than the 2021 average, the New York Fed said.
Applications for mortgage refinancing were also much lower in 2022, declining from last October’s 21.4% to 8.9% in October of this year, though that’s “comparable to levels that prevailed during the October 2017-2019 period, prior to the recent refinancing boom,” according to a press release from the New York Fed.
The application rate for auto loans in October 2022, 12.9%, was equal to last year’s rate, though the average application rate dipped from 14.6% last year to 13% in 2022, the New York Fed added.