Homeowners adopt "buy now, pay later"

Buy now, pay later services are now a common part of the way Americans shop. People tend to use BNPL services like Affirm and Klarna when budgets are tight and savings are low.

But new data out from the JPMorgan Chase Institute found that these credit products are becoming increasingly important during and after the homebuying process. (That’s the case for renters, too.)

Owning a home is the American dream, right? So, people tend to try to get their credit in order before they do it.

“Right before, especially frequent users of BNPL, buy a home, we see their credit card balances come down by like 12%, 13% — something like that,” said Chris Wheat, president of the JPMorgan Chase Institute. “And then after they buy a home, you see things like their BNPL usage really go up quite a bit more.”

That’s because owning a home for the first time comes with lots of new expenses.

“We do see that people do borrow quite a bit when it comes to furnishing their home, and many sellers of appliances and furniture are now using buy now, pay later as a key way to pay,” said Rohit Chopra, the former head of the Consumer Financial Protection Bureau.

This data reflects a larger trend, per Ed deHaan, a professor at the Stanford Graduate School of Business.

“BNPL isn't just 18-year-olds who've never had a credit card,” he said. “It's really come into the mainstream, and even people who can afford a house are now using BNPL as part of their digital wallets.”

That comes with its own set of risks. According to JPMorganChase Institute’s research, first-time homebuyers who are frequent users of buy now, pay later services have an over 8% higher chance of missing a payment within a year of their purchases compared to people who rely on other methods to cover their shopping.