Record High Loan Rejection Rates Hit Americans, Fed Reports
The rejection rate for loan applications in the US has risen to 21.8%, the highest level in five years, according to a Federal Reserve survey. The increase was seen across age groups, with those having credit scores below 680 facing the highest rejection rates. This trend reflects the caution of financial institutions amid an aggressive Fed rate hiking cycle and concerns of a potential recession. Major banks, including Citigroup, are setting aside more money to cover delinquencies as delinquency rates in credit cards and retail lines rise. The rejection rates for auto loans, credit cards, credit card limit increases, mortgages, and mortgage refinances have all increased, indicating a risk-averse approach by banks.