Credit is tightening across the U.S., and a new post from market commentator The Kobeissi Letter on X has drawn attention to a notable spike in rejection rates reported by the New York Federal Reserve.
According to the data highlighted in the post, the overall rejection rate for U.S. credit applications has climbed to 24.8% over the past 12 months. That is the highest level since tracking began in 2014, and it means about one in four applications are rejected.
The surge in denials could indicate banks' growing concern over economic uncertainty, as inflation and tariffs continue to weigh on American households and pressure lenders to adopt stricter standards.
The Kobeissi Letter noted that the rate has risen 10.4 percentage points since February 2020, reflecting the sharp tightening in lending standards since the pandemic era.
Mortgage And Refinance Rejections Hit Multi-Year Highs
The housing sector is showing some of the most severe tightening. According to the data flagged by The Kobeissi Letter, mortgage refinance rejection rates have jumped to 45.7%, setting a new all-time high, while new mortgage application rejections hit 23.0%, the highest since 2015.
At the same time, President Donald Trump's plan to push for a 50-year mortgage, pitched as a way to ease housing affordability, has entered the national conversation. While such a loan could lower monthly payments by stretching them over five decades, critics note it could also lead to higher long-term borrowing costs and much slower equity buildup.
Auto Loan, Credit Card Rejections Remain Elevated
Auto financing is also becoming more difficult to secure. The Kobeissi Letter highlighted that auto loan rejection rates increased to 15.2%, the second-highest level on record. Elevated monthly payments and tighter credit assessments are key drivers.
Even though credit card rejection rates held steady at 21.2%, they remain historically high, further signaling a broad pullback in consumer credit availability.
Meanwhile, mortgage underwriting standards are undergoing structural changes at the federal level. In recent days, Fannie Mae removed its minimum credit-score requirement for most loans run through its automated system, while Freddie Mac continued expanding approvals for borrowers with no traditional score by using verified rent, utility, and other payment histories. Regulators have also authorized both agencies to adopt newer scoring models incorporating "trended" data and alternative payment information.
READ NEXT:
Image via Shutterstock
