It’s been getting a little harder to get approved for a loan this year, according to a new survey out this week from the New York Federal Reserve. It found that rejection rates for loan applications are higher than they were in 2023 for credit cards, auto loans, mortgages and refinances.

Over the last few months, Todd Sharkey, chief credit officer at Sunrise Banks in Minnesota, said the bank has been getting more loan applications from borrowers who are feeling a little stretched.

“We’re seeing maybe some more stressed debt-to-income ratios, we’re seeing some credit scores that are falling a little bit, and so that has led to some natural rejections, comparatively,” said Sharkey.

He said the bank hasn’t tightened its lending standards or anything. Instead, it’s simply encountering an issue in the broader economy: People’s debt levels have been rising.

“Just as people are spending more, to be able to meet their basic daily needs. I mean, I can’t say that we’re seeing this across the board, but you know that certain segments are being financially strapped,” said Sharkey.

Especially lower-income segments.

Nancy Vanden Houten, lead economist at Oxford Economics, said those borrowers are having the most trouble with credit card and auto loan applications.

“With credit cards, we know that some borrowers are stretched, particularly lower-income borrowers. For auto loans, we’ve seen a pretty notable rise in delinquencies,” she said.

Meanwhile, Vanden Houten said mortgage rejection rates have been rising for a different reason: The sheer cost of buying a house.

“Given the historically low affordability conditions that we have right now, with mortgage rates still relatively high, and prices also high,” she said.

Rising rejection rates aren’t necessarily a red flag for the economy. They can also be a sign that more people are applying for loans.

That’s because when the number of loan applications goes up, “Naturally with that, you would expect that the number of rejections that you’re going to experience is going to be a little bit higher,” said Dominik Mjartan, CEO of American Pride Bank in Macon, Georgia.

He said demand for mortgages, and other loans, has been rising ever since the Federal Reserve made it clear that it was going to start cutting interest rates.

“Customers started to reach out, because they knew that was coming. So they wanted to be in the queue to benefit from the lower rates,” said Mjartan.

And that’s a sign that people still feel confident enough to borrow right now, said Ben Ayers, senior economist with Nationwide.

He said even though interest rates are still relatively high, “I think underneath the surface, there’s still a good amount of demand for homes and for other types of loans, and that’s going to be positive for the economy as we look out in the medium term.”

Ayers said as long as the labor market stays strong into next year, that demand should continue. And people applying for loans might have better luck.