It’s getting harder to obtain loans. That’s exactly what the Fed wants.

When 29-year-old Eduard Van Osterom went to buy a used car last month, they knew they couldn’t cover the whole price, which was $25,000 and change.

So, they applied for a loan at the Baltimore dealership. Which … was rejected. So did their second application. And then, the third. 

“I felt like I was going to throw up the whole time. Why can’t we just get what we need?” Van Osterom said.

Van Osterom doesn’t have the best credit score. They were out of work for a couple of years and defaulted on their credit cards. Eventually, they decided to make a small down payment on the car, and the application went through. 

But their experience is becoming more common. According to the latest survey of consumer expectations by the Federal Reserve Bank of New York, lenders rejected nearly 22% of loan applications over the past 12 months. That’s the highest rejection rate in more than five years.

“It’s getting harder to get most different types of loans,” said Matt Schulz, chief credit analyst at LendingTree.

He pointed out that the delinquency rate for credit cards has been gradually ticking up. And lenders are wary of student loans coming due again this fall.

“Most people’s financial wiggle room is pretty small, even before they have to start repaying their student loan,” Schulz said.

Banks are also trying to protect themselves, as they cast nervous glances at their rearview mirrors. 

“When you look at the list of the largest bank failures in American history, three out of the top four have all occurred this year,” said Tim Quinlan, a senior economist at Wells Fargo.

Meanwhile, if rejecting loan applications also forces consumers to stop spending at such a fast clip, that could help pull down inflation. Which, on a macroeconomic level, Quinlan said, is exactly what the Fed wants.

“They’re trying to kind of throw some sand into the gears of the economy and slow things down a little bit,” he said.

That doesn’t make it any less painful for individual consumers whose spending is being slowed down when they just want to get into a new car and go.