Afterpay Users Advised to Close BNPL Accounts to Secure Mortgages
Mortgage Hopefuls Face Hurdles Due to Buy Now, Pay Later Accounts
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Recent findings have brought to light a concerning trend affecting users of Buy Now, Pay Later (BNPL) services in Australia.
A survey conducted by Afterpay revealed that over 10% of its customers were advised to close their BNPL accounts to qualify for a mortgage.
Alarmingly, these individuals were subsequently offered credit cards by the same banks or mortgage brokers that recommended the account closures.
This development underscores the competitive dynamics within the consumer finance sector and highlights the challenges faced by BNPL users in securing traditional forms of credit. Despite BNPL services offering flexible, interest-free payment options, some financial institutions perceive users of these services as higher risk compared to traditional credit card holders.
Michael Saadat, Head of Public Policy at Afterpay, expressed concern over this practice, emphasizing the need for transparency and fairness in the lending process. He noted that BNPL users often have credit scores and repayment records comparable to those of credit card users, challenging the notion that they represent a higher credit risk.
In response to these concerns, new legislation effective June 10, 2025, mandates credit checks for BNPL users, aiming to enhance credit transparency and ensure responsible lending practices. This regulatory shift is expected to reshape the BNPL landscape and its interaction with traditional financial institutions.
For consumers, particularly those relying on BNPL services, it's crucial to be aware of how these accounts may impact their creditworthiness and mortgage eligibility. Consulting with financial advisors and understanding the nuances of different credit products can aid in making informed decisions aligned with one's financial goals.
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