Thursday, September 18, 2025

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Americans Grapple with Rising Loan Denials Amid High Interest Rates

Americans are facing increasing challenges in obtaining credit, as revealed in a recent New York Fed survey from July. This rising hurdle in securing loans comes in the wake of soaring interest rates and a more conservative stance by US lenders.

In the past year leading up to June, the rejection rate for loan applications spiked to 21.8%, marking the highest in half a decade. In fact, the total number of credit applications plummeted to a nadir last seen in October 2020. This significant rise in loan rejections contrasts sharply with the previous survey’s rate, which stood at 17.3% in February. This surge isn’t isolated to a specific demographic, though; it’s spread across different age groups, while those with credit scores under 680 face the highest rejection rate.

The auto loan sector paints a particularly grim picture. For the first time since the survey’s inception in 2013, the rejection rate— which surged to 14.2% from a mere 9.1%, has outpaced the application rate, suggesting a profound shift in the lending landscape. To put this into perspective, nearly one in three individuals who applied for an auto loan anticipated their application would be denied— an all-time high.

The pessimism isn’t just restricted to auto loans. The survey highlighted a sharp uptick in the number of people who believed that their applications for new mortgages, mortgage refinancing, or requests for increased credit-card limits would also face rejection.


Information for this briefing was found via the NY Fed. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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