As the credit markets tighten up and rejections become more likely, consumers are beginning to pull back on borrowing activity. According to the New York Fed, discouraged borrowers – those who need a loan but choose not to seek one out because they expect to be refused – climbed to 8.5% of U.S. consumers last month, the highest level since 2013.
This is having a ripple effect across the entire credit market, with an increased likelihood of being rejected across various types of credit including credit cards, secured loans, home, and auto loans. What’s more, nearly half of borrowers believe it will be harder to get credit in a year.
At the same time, only 63% of consumers say they could come up with $2,000 in an emergency, a new low for that measure.
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