Buy Now Pay Later Christmas shopping risks highlighted

New research by Mojo Mortgages has found that 89% of the top 100 most trending Christmas presents can be purchased through Buy Now Pay Later (BNPL) methods. The research also showed that 75% of these products promote BNPL options on their product pages, enticing consumers to make purchases they might not have planned for or can afford.

The average cost of these gifts sits at £128.76, and given that most people need to buy for 6-10 recipients, the total expenditure can quickly escalate meaning that a typical shopper could find themselves racking up between £772.56 and £1,287.60 in BNPL commitments this season should they buy all of their presents through BNPL methods.

Last year, research from TSB revealed that over half (56%) of consumers use some form of credit to fund their Black Friday weekend purchases, with BNPL spending increasing by nearly 80% compared to previous weeks. This significant spike raises concerns about accumulating multiple short-term debts that could impact your mortgage eligibility. Further Research from Experian shows that nearly half (48%) of BNPL users have missed at least one payment, with 47% racking up extra fees.

Commenting on this, John Fraser-Tucker said, “Missing a BNPL payment isn’t just bad news for your bank account—it can mess with your debt-to-income ratio and overall creditworthiness, two things mortgage lenders assess when you’re applying for a mortgage.

John Fraser-Tucker, Head of Mortgages at Mojo Mortgages said “While BNPL can feel like a helpful tool during the holiday rush, these small commitments can escalate into larger financial challenges. If you’re hoping to buy a home in 2025, now is the time to be cautious.”

“Even if you pay your BNPL commitments on time, lenders are wary of seeing multiple credit commitments. They may see it as a sign that you’re stretching yourself thin financially, posing an overall risk that you might not be able to keep up with mortgage payments, potentially costing you your dream home.”

“Whilst BNPL isn’t a new concern for lenders, the market is expected to grow to £40 billion by 2026—accounting for 10% of all e-commerce spending. Due to this rapid growth, we’re witnessing more lenders incorporate detailed BNPL checks into their standard underwriting processes. As this market expands, expect these assessments to become even more thorough.”

“If you’re planning to buy a home in 2025, Be mindful about how you approach holiday spending. Instead of relying on BNPL, consider setting a strict budget and using cash or debit cards to avoid taking on new credit commitments.

“If you can’t afford to buy a present outright, don’t feel pressured to do so. Your friends and family will understand your situation if you’re saving for a house. The important thing is to prioritise your financial health now so you can enjoy  homeownership later.”