Fed Consumer Financial Expectations Surveys Show Outlook on Credit Access


8/4/2017 2:00:00 PM

Consumers share experiences on credit applications and payments as well as their overall household finances in the last 12 months and for the year ahead.

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Consumers’ credit card application rates during the past 12 months increased while the percent who say they are likely to apply for at least one type of credit in the year ahead declined slightly, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations Credit Access Survey.

The Credit Access Survey focuses on “consumers’ experiences and expectations regarding credit demand and credit access,” according to a news release from Fed. Every four months, the survey gauges consumers’ applications for credit and the likelihood they will be approved for credit cards, auto loans, credit limit increases, mortgages and mortgage refinancing.

Survey results for June 2017 show the application rate for credit cards increased to 29.5 percent from 25.3 percent in February, when the last survey was conducted.

The application rate for all credit types included in the survey increased significantly from 39.9 percent in February to 43.6 percent in June, the highest result since the survey started in October 2013.

“The proportion of respondents who applied for credit and were granted credit over the last 12 months increased from 31.5 percent in February to 32.8 percent, while the proportion of respondents who applied for credit and were rejected rose from 8.5 percent in February to 10.8 percent,” the Fed reports.

Looking at results showing consumers’ credit access expectations for the next 12 months, “the average expected likelihood of applying declined for all credit types, except for credit limit extensions. However, consumers are slightly more optimistic of future approval rates for credit cards, mortgages and auto loans.”

The proportion of respondents who report they are likely to apply for at least one type of credit over the next 12 months decreased from 26 percent in February to 25.5 percent in June, marking the lowest reading for credit application expectations since the start of the survey in October 2013.

“The average likelihood of applying for specific kinds of credit over the next 12 months declined for all credit types, except for requested increases in credit card limits, which increased slightly. The largest reduction was in the likelihood of applying for mortgage and auto loans, which fell from 8.8 percent and 12.2 percent in February to 7.3 percent and 10.9 percent, respectively,” according to the Fed.

Consumers’ perception of their “financial fragility,” based on needing and having money for an unexpected expense, worsened somewhat between February and June.

“The average probability of needing $2,000 for an unexpected expense in the next month increased from 31.4 percent in February to 32.2 percent,” according to the Fed. “The average probability of being able to come up with $2,000 if an unexpected need arose within the next month declined from 68.4 percent in February to 67.1 percent.”

June 2017 Consumer of Expectations

The Fed also recently released its monthly Survey of Consumer Expectations results for June 2017 with additional findings on credit availability, spending growth and making debt payments.

Main findings on household finance in the survey include:

  • The median expected household income growth in June was unchanged from May at 2.74 percent. Median household spending growth expectations increased from 2.6 percent in May to 3.3 percent in June.
  • Consumers’ perceived change in credit availability in the year ahead improved slightly. For example, 3.31 percent said access to credit a year from now would be much easier, compared to 2.59 percent in May while the percent who said it would be much harder declined from 6.32 in May to 4.84 in June.
  • The Fed reports the average perceived probability of missing a minimum debt payment over the next three months declined from 13.1 percent in May to 12.03 percent in June.

The full survey results are available on the Fed’s website.

The Survey of Consumer Expectations is based on consumers’ expectations for overall inflation and how they expect prices for food, gas, housing and education to behave. It also shows consumers’ views on job prospects, earnings growth, and their expectations about future spending and access to credit.

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