Buy Now, Pay Later rules and Mortgage sensitivities.

Why 2026 could change how we borrow

A major shift is coming to everyday borrowing in the UK, and many households may not yet realise it. The Financial Conduct Authority (FCA) has confirmed that “buy now, pay later” (BNPL) products — widely used for online shopping — will be formally regulated from July 2026. You may recognise names such as Klarna, Clear pay PayPal, Monzo Flex.

BNPL allows shoppers to spread payments interest-free over short periods. It has grown rapidly, but until now has sat outside many consumer credit rules. Under the new regime, lenders must carry out affordability checks, clearly explain repayment terms and offer support to customers in difficulty. Consumers will also be able to complain to the Financial Ombudsman if things go wrong.

The change reflects wider concern about household finances. Mortgage costs remain sensitive to interest rates: after the Bank of England held rates steady, major lenders increased some mortgage prices, with two-year fixes averaging about 4.5%. Meanwhile inflation has eased to around 3%, offering some relief but still leaving budgets tight.

Regulators say they increasingly want firms to focus on “good outcomes” for customers rather than simply following rulebooks.

For the public, the message is simple: borrowing — whether a sofa in instalments or a mortgage — is becoming more scrutinised. The aim is safer credit, but it may also mean fewer instant approvals and closer checks on what people can truly afford.

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