A record share of consumers in March said credit standards were tighter than a year ago, according to a new look at consumer expectations that also showed people predicting their access to credit would only narrow in the year ahead.
After Silicon Valley Bank and Signature Bank failed in early March, experts and policymakers predicted one outcome would be tighter credit access from banks that were feeling the jitters about their lending approaches.
In an ongoing look at consumer perceptions, just over 58% of those polled said it was either “much harder” or “somewhat harder” to tap some form of consumer credit compared to a year ago. That’s up from 55.7% one month earlier.
Almost 53% of the people polled last month said it would be “much harder” or “somewhat harder” to access credit in the year ahead. Last month, 48.7% said they felt the same way, a New York Federal Reserve report released Monday said.
NY Fed researchers design the survey of “consumer expectation” to hear from consumers throughout the month. Since 2013, researchers have been using this survey of consumer expectations to ask about credit availability.
Perceptions of tightening credit and actually tougher lending standards are coming at a tough time for households. (Late last week, other data from the Federal Reserve showed deposits stabilizing, but lending dropping off sharply.)
Rising prices
Inflation makes it harder for many people to keep up with costs without resorting to services like credit cards. By the end of last year, NY Fed data showed credit-card balances surpassing a pre-pandemic high to reach $986 billion.
In the wake of the two bank collapses and worries about the health of smaller sized banks, credit-card industry experts said consumers would likely feel the effects through shorter lines of credit on their cards and higher credit score thresholds for the best APRs.
The question remains if and when tougher requirements kick in, and how strict they would be. A “credit crunch” — the swift sudden pullback in lending — has already begun, said Torsten Slok, chief economist at Apollo Global Management.
The next read on inflation comes Wednesday morning when the Bureau of Labor Statistics releases its Consumer Price Index numbers for March.
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