Fewer Americans expect to apply for new credit or refinance existing debt over the next year, according to TransUnion's Q2 2026 Consumer Pulse Study, with the sharpest pullback coming from higher-income households that have remained among the most active borrowers during the housing market's affordability crunch.
The study found that 28% of consumers plan to apply for new credit or refinance existing credit within the next 12 months, down from 33% a year earlier. While the decline was seen across generations, high-income consumers reported one of the most significant shifts, with plans to seek credit falling from 44% in Q2 2025 to 31% in Q2 2026.
At the same time, household finances appear to be coming under greater pressure. Only 27% of consumers reported an increase in household income during the past three months, down from 30% a year ago, while 57% said their income remained unchanged.
"Affordability has become the defining issue shaping consumer finances today, yet consumers remain remarkably resilient," said Charlie Wise, head of global research and consulting at TransUnion. "Against a backdrop of ongoing pressure from inflation and higher everyday expenses such as filling up their gas tanks or dining out, consumers remain optimistic about their future finances and are less pessimistic than a year ago."
Overall, 55% of consumers said they are optimistic about their household finances over the next 12 months, unchanged from a year ago, while financial pessimism fell to 23% from 27%.
For mortgage professionals, however, the more significant finding may be how affordability concerns are influencing borrowing behavior.
Inflation remained consumers' top financial concern, cited by 83% of respondents as one of their top three household financial worries. Housing prices, including rent and mortgage payments, tied with interest rates at 42%, while concern about gas prices climbed sharply, with 71% of consumers saying they were very concerned about rising fuel costs.
The study also found that 42% of consumers believe their household income is not keeping up with inflation, compared to 34% who believe it is.
Among generations, Gen X reported the greatest affordability strain. Across all 13 spending categories measured by TransUnion, Gen X consumers were more likely than any other generation to describe purchases as unaffordable. Forty-three percent described housing costs as unaffordable, while 45% said the same about utilities, and 62% cited gasoline costs as unaffordable.
"Several factors likely contribute to Gen X affordability angst, particularly the 'sandwich generation' dynamic of supporting children while caring for aging parents, which may put greater strain on their household budgets," Wise said.
Despite the overall decline in credit demand, the report suggests that consumers focused on interest rates remain engaged.
Among consumers who listed interest rates among their top three financial concerns, 31% said they plan to apply for or refinance credit in the next year, compared with 27% of all other consumers.
TransUnion noted that these borrowers may be positioning themselves to take advantage of refinancing opportunities should rates decline.
Among consumers planning to seek credit, 15% said they intend to refinance a mortgage or home loan during the next year, while 13% expect to obtain a new mortgage and another 13% plan to open a new home equity line of credit. Eleven percent said they expect to refinance an existing home equity loan.
Consumers concerned about interest rates were also more likely to refinance a home equity loan than consumers without similar concerns.
"While consumers report less interest in applying for or refinancing credit, our proprietary data shows demand remains healthy," Wise said. "At the same time, consumers often take on more credit during periods of economic pressure as a safeguard against potential shocks such as job loss. Encouragingly, many still report optimism about their financial outlook."
What It Means For Mortgage Professionals
The survey points to a consumer base that remains financially resilient but increasingly focused on affordability and cash flow.
While overall credit demand has softened, borrowers concerned about interest rates continue to show interest in refinance opportunities and home equity products. At the same time, mounting affordability pressures among Gen X homeowners — many of whom have accumulated substantial equity while navigating higher household expenses — could continue supporting demand for second-lien lending, HELOCs, and other payment-management strategies.
The data also suggests lenders may need to pay closer attention to higher-income borrowers. Their willingness to seek new credit fell more sharply than that of other income groups, a sign that affordability concerns are beginning to reach beyond traditionally rate-sensitive consumers.
*This article was primarily written by a human author. AI tools were used in a limited capacity for research assistance or light editing
