After the Strait of Hormuz closure, lenders are scrutinising borrowers more closely as US inflation hit 3.2% in March and the Federal Reserve kept rates unchanged.
Mortgage and auto applicants with mid-range FICO scores are facing more documentation demands, higher cutoffs and surprise denials, even when rates may eventually fall.
Economists say the war is tightening credit through a risk channel that could curb borrowing and consumption, though some lenders say approvals and losses remain broadly stable.
Your credit score hasn't changed, so why are you suddenly being denied for loans?
How is a distant naval blockade secretly rewriting the rules for getting a mortgage in America?
Is the Hormuz crisis a temporary oil shock or the start of a permanent credit crunch?
Eurozone Banks Tighten Credit Standards by 10% Amid U.S.-Iran Conflict and Energy Inflation in Q1 2026
Overview
In the first quarter of 2026, credit conditions tightened sharply across major Western economies, driven largely by escalating geopolitical tensions from the U.S.-Iran conflict. This conflict increased uncertainty and disrupted energy supplies, causing oil prices to surge and inflation to rise. As a result, banks became more cautious, tightening lending standards for businesses and consumers, while demand for loans fell. Higher energy costs and inflation squeezed both companies and households, leading to reduced spending, a cooling housing market, and stifled business investment. These combined pressures heightened recession risks and prompted cautious policy responses, with credit tightening expected to persist until geopolitical and economic stability improves.