How does it lead to financial difficulty when strict review processes can be implemented which evaluates customers likelihood to default on their mortgage payments?
People who have been renting for years are accustomed to budgeting enough to make their rental payments would be able to make mortgage payments especially when you consider a lot of the time mortgage repayments are cheaper per month than rent.
It’s a bit different compared to BNPL where you’re reassuring your customers that it’s fine to have debt and have your finances be in negative… not a great healthy way to approach finances imo.
If that truly worked, nobody would have their home repossessed.
I know they are totally different, I was pointing out your contradiction that Monzo shouldn’t do one thing but instead should do another, that also hurts people.
You not remember the cause of '08 crash? Subprime mortgages lent out by greedy banks.
If banks do their job the likelihood of the home being repossessed is reduced massively.
Of course some peoples circumstances change such as freak injuries happening but these are covered by the insurance you take out when getting a mortgage no?
I don’t actually think mortgages do sit in the same area as BNPL. They aren’t short term credit products designed to influence consumer behaviour. I don’t get the comparison really.
I don’t think that’s a contradiction at all though because the two things are so different,
Again BNPL is a short term product designed to influence purchasing behaviour. I think it’s perfectly consistent to be against that while not being against mortgages
I’d say “like any startup that is not making a net profit”
But as I can see through the news, it is always about the bad news.
The report has many good news for those who want to see them succeed
Well, no it’s a matter of their rate of spend being particularly high vs money in the bank.
I wasn’t meaning to rag on the annual report though just pointing out it reads like a raise is very much a certainty. Im sure they’ve been speaking to their investors and have the next round lined up.
A source close to Monzo’s BNPL project said it would feature affordability checks for customers – something rivals generally do not require. Data will also be shared with credit checking agencies to give other lenders a full picture of people’s debt positions.
Yes they can, clearly. But that doesn’t mean it is necessarily inconsistent that someone is against BNPL and isn’t against mortgages.
It’s about the way each product influences behaviour and what it’s purpose is. In that sense they are very different products. There’s plenty of room to have different feelings about each one respectively
All forms of debt can lead to difficulties. However…
A mortgage is usually tied to an asset that has residual value, can appreciate in value and provides for a basic human need --shelter. The risk is that interest rates can fluctuate when they revert from their fixed-rate period and can potentially put people in difficulty if they rise too much. Also, a lot can happen in 25 years that might mean you can’t make your payments. If the worst happens you can sell and have some hope of paying most if not all of the money back.
BNPL I’d put down there with payday loans --they’re lending products for people who have too big a gap between their income and their expectations. Yes, like credit cards they can be used sensibly, but Xbox All Access, or for a pair of shoes probably isn’t it --unless you literally have no shoes and are walking around barefoot. BNPL is often offered on consumer goods with little to no residual value, so if you have problems, you’re going to have to find the money from somewhere else.
I think I’m with you and @breville_monkey on this. As all credit, BNPL is a double-edged sword, and can be used well, or can be used to seriously harm your finances
Where I see the biggest difference is that there is this whole big deal around mortgages and getting them, paying them, etc. so people think about them as the serious commitment they are
Whereas BNPL is presented as “hey, fancy some leeway to pay?” at the checkout without significant friction so people with poor self control or financial education see “hey, fancy some free money?” and end up beggaring themselves.
I think it’s a good thing, as it’s a tool for people use. It just needs a hell of a lot more regulation and education.
(And Xbox All Access is one of the better examples to be honest)
For BNPL I’d caveat this with there are probably few ways to use them fully sensibly. In terms of personal finance, if you don’t have a few hundred pounds to buy something saved, in most cases you would be better off not buying it at all. If it’s completely necessary, then sure, but most things won’t be.
The only totally responsible way to use them really is to use them on 0% as a method of stooging (ie to keep balances in interest bearing savings accounts higher). But then also people who are good at saving are really less likely to be buying so many things.
That said there are uses that aren’t actively harmful - but still whether those uses are ‘sensible’ is something I’d question
Seems like a good point to repost the excellent advice I learned years ago, about knowing you’re ultimately going to have less money to spend if you borrow it.
My grandparents called Buy Now Pay Later (it’s not a new concept) spending on the “never never” and whilst it can be a great tool if you’re confident that the thing you’re buying is actually urgently needed, and your life situation won’t change in the short term (see the example above about a new washing machine), how many young people, who are new to debt, are still paying off ASOS clothing they no longer even wear?
I’m not sure I agree here – I’m a big advocate for credit cards, and in fact, think that the only sensible way to spend is to spend someone else’s money in the first instance*.
It leaves you with a little more room to breathe and grow the money you’d spend. Not to mention points/cashback and S75 protection
*need to heavily caveat that it only applies if the balance is paid off in full every month and you don’t use the card to spend more than you normally would. And thanks to @bee I forgot cash and cash-like transactions which are a big no-no
