Americans seek higher credit card limits
More people are asking credit card providers to give them higher credit limits, according to a New York Federal Reserve Bank report on Monday. In fact, applications for higher limits on cards reached the highest point in October since the bank began tracking them in 2013 through its credit access survey.
The share of people surveyed who reported recently applying for a higher credit card limit was 17.8%, matching a level reached in October 2023. The rate has been gradually rising from a low point of 7% in 2020, during the pandemic.
Meanwhile, the share of survey respondents who applied for higher credit card limits but were rejected dropped to about 29% from 45% one year ago.
The bank also found that more people are having their applications for other types of credit rejected, including those for home and car loans, as well as mortgage refinancing. The overall rejection rate for any form of credit over the past year rose to 24.8% in October from just over 23% in June, when the bank last collected this data. This is also the highest level since 2013. Rejections for car loans jumped from 6.7% to 15.2% over the four-month period.
More people surveyed also said they didn’t apply for credit of any kind because they believed they would be rejected. The “discouraged” rate rose to 8% in October, up from 7.2% in June and 6.6% a year earlier.
Applications for home loans fall
Mortgage rates are back on the rise — and it's sending some borrowers back to the sidelines.
In the week ended Nov. 14, the Mortgage Bankers Association's measure of mortgage loan application volume decreased 5.2% compared to a week earlier, according to data released on Wednesday. That overall decline was driven by a 7% weekly decrease in both refinance demand and purchase demand.
The ebb in demand is the direct result of rising mortgage rates, Joel Kan, the association's deputy chief economist, said in a statement.
“Application activity over the week was lower, with potential homebuyers moving to the sidelines again," Kan said. "Refinance applications decreased as borrowers remain sensitive to even small increases in rates at this level."
Even so, a more zoomed-out look shows there have been improvements in the mortgage market compared to this time last year. Refinance applications are still 125% higher than a year ago, and purchase applications are up 26%, according to Wednesday's data.