![]() “That has accelerated the tightening of lending standards.”Įarlier this year, US bank regulators proposed a new rule that would increase the level of capital that banks with at least $100 billion in assets would be required to hold. “That has led to the prospect of increased capital requirements for a larger swath of banks, not just the big banks,” he said. McBride also said that while lending standards have been tightening for more than a year, the recent failures of regional banks, like Silicon Valley Bank and Signature Bank, may have pushed standards to become even more strict. Eccles Federal Reserve building in Washington, DC, US, on Saturday, June 3, 2023. “I was just dumbfounded,” she said.Ī pedestrian passes the Marriner S. Magnusson said she was “in tears” after spending hours on the phone with USAA to secure the loan over multiple days. While Magnusson and her husband ultimately secured the loan from USAA with an interest rate of 10% to renovate their kitchen in July, USAA required the couple to provide more than 20 financial documents to gain approval, she said. Deutsche Bank recently told investors that bank lending conditions look “consistent with recession levels,” even though the US is not currently in a recession. Rejections jumped across the board, rising 14% for auto loans, 13% for mortgages, and nearly 31% for credit card limit increases. That means Americans not only have to search harder for a willing lender, they must also provide more documentation to get approved, making it more challenging to fund big-ticket purchases like cars, homes, and renovations.Īccording to the Federal Reserve Bank of New York’s June Survey of Consumer Expectations, the overall rejection rate for credit applicants increased to nearly 22%, the highest level since June 2018. New research shows banks and other lenders have tightened their lending standards to an extraordinary degree in recent months. Lately, it may take more than just a good credit score for many people to get approved for a loan. These are the best places to park your cash Nopphon Pattanasri/iStockphoto/Getty Images Magnusson’s credit score is above 800, according to a screenshot she provided which was viewed by CNN. That included tax returns and other financial documents back to 2020, even though, according to Magnusson, she and her husband have enough income to pay off the loan in less than one year. “They started asking for every document you could imagine,” she said. Magnusson said that while she used USAA for a personal loan in the past, this time, the process felt very different. But after multiple brokers told her they no longer offered that type of loan, she turned to USAA, a financial services company for military veterans and their families, for a personal loan of $75,000 instead. She said they always easily landed loans, including a mortgage in 2009 in the wake of the US housing crisis.Īt first, Magnusson, a teacher in Arizona who runs a consulting company with her husband, considered a home equity loan, sometimes called a second mortgage, because a borrower’s home secures the loan. ![]() Cheryl Magnusson and her husband wanted to borrow money for a home renovation project earlier this year.
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