A new report from JPMorgan Chase reveals that U.S. homeowners are increasingly relying on buy now, pay later (BNPL) services to navigate tight budgets, major life events and liquidity shocks such as job losses.
Published on March 3, the research highlights how BNPL has evolved from a simple checkout convenience into a crucial cash-flow management tool for mortgage borrowers. Notably, the study found that frequent BNPL users increase their usage nearly fourfold after closing on a home, and first-time homebuyers who rely heavily on the service face a more than 8% higher risk of missing a mortgage payment within their first year of purchase.
The findings arrive against a backdrop of explosive growth in the BNPL sector. According to the report, purchase volumes for BNPL surged from roughly $2 billion in 2019 to more than $75 billion by 2023.
By 2022, about 1 in 5 consumers had used BNPL at least once, the JPMorgan Chase researchers found. Despite this expansion, many short-term “pay-in-4” BNPL loans, which split a purchase into four equal payments, remain unevenly reported to credit bureaus and largely invisible on traditional credit reports. This limited visibility obscures a consumer’s full financial picture, making it difficult to understand how this debt interacts with mortgage obligations.
To conduct the study, researchers linked anonymized bank accounts with credit bureau records from 2019 through 2023, tracking roughly 4.5 million homeowners to understand how the often invisible debt impacts household balance sheets.
The data indicates that consumers are actively using BNPL to manage the expensive transition into homeownership. Frequent BNPL users were found to cut their traditional credit card balances by 12% to 13% just prior to purchasing a first home, only to ramp up their BNPL spending immediately after closing.
Furthermore, the report underscores BNPL’s role as a “liquidity valve” for financially strained households. For instance, BNPL usage among homeowners is notably higher for individuals with maxed-out credit cards and tight budgets, while it remains lower for those who maintain larger savings buffers.
This reliance becomes especially pronounced during economic downturns, underscoring concerns over recent government data showing rising unemployment and heightened inflation risks.
Following involuntary job loss, BNPL’s share of overall spending tends to rise sharply. For lower-income borrowers with Federal Housing Administration loans, BNPL spending can exceed 20% of their total expenditures after losing a job, according to JPMorgan Chase’s research.
The findings paint a complex picture for the mortgage industry. While recent industry efforts have attempted to bring BNPL activity into the mainstream credit reporting system — with some large providers now furnishing data and FICO announcing models that incorporate BNPL history — reporting for short-term loans remains uneven across firms.
