Credit Demand and Access Plunged During Pandemic

Credit Demand and Access

Credit Demand and Access Plunged During Pandemic

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released results from its latest Survey of Consumer Expectations (SCE) Credit Access Survey, which provides information on consumers’ experiences with, and expectations about, credit demand and credit access. The survey is fielded every four months, most recently in October 2020.

The latest Credit Access Survey reveals the stark imprint of the pandemic on consumer credit markets, with most credit application and acceptance rates falling sharply after February 2020. Application and acceptance rates for credit card and credit limit increase requests showed the largest declines, followed by auto loans.

Meanwhile, application and acceptance rates for mortgage refinances continued to surge through 2020, with primarily high credit score borrowers taking advantage of lower mortgage rates.

Credit Cards

The proportion of households applying for any form of credit over the past 12 months fell by 11%, to 35%, between February and October. But the drop in demand was sharper for new credit cards, where the application rate fell 10% to just under 16%, the lowest level since the Fed began collecting application data in 2013.

Credit Card Applications

The decline was broad-based across credit score and age groups, but largest for those with credit scores below 760 and those aged 60 or older. Overall, the average 2020 application rate of 39.8% was well below the 2019 average of 45.8%.

At demand for credit has fallen, financial institutions have also become more selective about extending it. Rejection rates for all types of consumer credit application rose by almost 4 percentage points, to 18 per cent, between February and October.

Credit card balances held by US banks have also fallen by about $100 billion, to $750 billion since the pandemic began. Credit card networks recorded lower spending for much of the year as consumers were focusing on essential purchases only for several months. However, Visa and Mastercard said there had been an almost full recovery in US payment volumes by October.


Over 15% of the surveyed households applied for a mortgage refinancing in the 12 months ending in October, according to the Fed survey. That is up from 11% in February, reflecting sharply lower interest rates. The increase was driven by those with high credit scores (above 760).

Mortgage Refinancing

In contrast to application rates for mortgage refinancing, mortgage loan application rates declined from 6.7% in February to 5.5% in October.


The proportion of respondents who report that they are likely to apply for at least one type of credit over the next 12 months increased slightly, rising from 24.9% in October 2019 to 26.1% in October 2020. The increase was driven by those with credit scores below 760.

The average likelihood of applying for a credit card or credit card limit increase over the next 12 months declined however. It fell by 36% and 34%, respectively. The decline was driven by respondents with credit scores above 680.

The average perceived likelihood of a credit application being rejected, conditional on applying over the next 12 months, has increased since February for credit cards (by 46%) and credit card limit increases (by 27%), with marginal increases for auto loans and mortgage refinancing. Meanwhile, the average perceived likelihood of a future mortgage application being rejected declined slightly.

You can read more information and see the results of the survey here.

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