More Americans sought home loans and more were approved last year compared to 2018, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations Credit Access Survey [1], released in December.
Application rates for all types of credit rose to 45.8% in 2019, up from 45.5% in 2018, according to the survey. The increase was most prevalent among those between the ages of 40 and 60 and for those with credit scores below 680.
Mortgage loan application rates rose from 6.7% in 2018 to 8.4% in 2019. However, in contrast to the lower-credit score trend among all types of credit applicants, mortgage loan applicants tended to have higher credit scores. The New York Fed reported that the mortgage loan application rate was boosted by applicants with credit scores above 680.
Refinance application rates dropped in 2019, from 8.3% to 8%. This coincides with falling mortgage rates.
While more Americans applied for mortgage loans—and other types of credit—fewer were rejected. Rejection rates were down among applicants for credit cards, mortgages, and mortgage refinances. The rejection rate for mortgage loans was 15.6%, down from 19% a year ago.
However, despite last year’s rise in the share of mortgage loan applicants and fall in rejections, consumers are more pessimistic about being approved in the future.
The “average perceived likelihood” of having a mortgage loan rejected over the next year rose 1 percentage point in 2019 to 34.6%. However, the “perceived likelihood” of being rejected for a refinance loan decreased.
More Americans plan to apply for at least one type of credit over the next 12 months than last year, with 26.8% saying they are likely to apply. This is up from 25.6% saying they would be likely to apply over the next 12 months a year ago.
Over the past year, the share of consumers who report needing credit but not applying because they believed they would be rejected increased by 0.1 percentage point, reaching 6.4%.
Across all types of credit, 37.7% of consumers applied for and received credit in 2019, up 1.2 percentage points from 2018. The share of consumers who had credit applications rejected fell from 9.1% to 8% in 2019.