Buy now, pay later debt among the headwinds in the market next year
Credit delinquencies have been a growing concern throughout 2025, and those concerns will likely carry over into 2026.
While student loan debt and automobile loan delinquencies have been the biggest stories of the year, a growing concern is emerging that might not even show up on a borrower’s credit report. That concern is buy now, pay later (BNPL) loans, which are one of the big headwinds brokers should be aware of heading into 2026, according to one expert.
Roby Robertson (pictured top), EVP of marketing and origination technology strategy at LoanLogics, is largely optimistic about the outlook for 2026. However, there are a couple of challenges brokers will need to focus on, one of which is the so-called “shadow debt.”
“I don't think you really hear about it a lot in the publications,” Robertson told Mortgage Professional America. “It's something they should really keep a finger on. I didn't really hear about it until I started hearing from my clients. We offer a non-QM calculation, and one of the first questions is, ‘Are you capturing buy now, pay later loans?’
“I didn't even think about that stuff. I've been getting it presented to me on my phone. Every time we pop into our banking app, it's like, ‘Hey, you can pay this later.’ I really have not thought about the implications to the overall mortgage structure, because there's just so much of that going on.”
More debt for the holidays
The use of BNPL loans is expected to increase during the holiday shopping season. PayPal estimates that 50% of consumers expect to use it as a flexible payment option for holiday shopping. In addition, 52% of shoppers said they’d be more likely to purchase something where BNPL is an option.
This presents a problem for brokers and lenders evaluating credit reports. Only one BNPL company reports data to the credit industry, and it reports to only two of the three credit bureaus.
States are starting to take notice of the growing trend of shadow debt. On Friday, North Carolina attorney general Jeff Jackson sent a letter to the six largest BNPL firms: Affirm, Afterpay, Klarna, PayPal, Sezzle, and Zip. He wants to know if they’re “placing North Carolinians at financial risk or violating consumer protection laws.”
Robertson said this type of debt is becoming more common and is emerging in the non-QM space among self-employed borrowers.
“If I'm a self-employed borrower, or one of these more complex borrowers, I may have a lot of debt flowing in this shadow debt area, and so I think it's something that lenders are really having to take a look at, and the credit bureaus are really taking a look at,” he said. “Many times it's the banks themselves that are offering these loans.
“So it's going to be interesting how that all shakes out. There’s going to be a lot of money that people are paying later, and it's not quite showing up on your debt-to-income. So it's something we're going to have to keep a close eye on.”
Consolidation in the industry
Another area brokers and lenders should keep an eye on in the new year is continued market consolidation. Whether it is companies picking up more pieces of the overall loan journey, or individual brokerages being swallowed up by larger companies, Robertson believes the trend will continue in 2026.
“I think mortgage is an industry like all the rest,” he said. “I heard a story recently about the veterinary industry, and vets are getting gobbled up, and I think mortgage is no different. I think it's natural that there are going to be some big players that are going to try to do the right thing for their stakeholders. And the right thing is vertical integration. How can I gobble up my supply chain?
“If you look at some of the Rocket acquisitions as of late, they made some important, smart acquisitions. When they acquired Redfin and Mr. Cooper, they absolutely make sense for their shareholders and their stakeholders.”
Brendan McKay of the Broker Action Coalition warns that rising credit report costs have pushed brokers to a breaking point. He says the structure allows unchecked pricing, calling for stronger oversight and louder industry pushback.https://t.co/IyHAm5uqaf
— Mortgage Professional America Magazine (@MPAMagazineUS) December 5, 2025
However, he doesn’t necessarily see it as troublesome for the industry, but rather as part of the natural cycle when the market tightens. He believes that if rates were to drop much lower again, more companies would spring up to take advantage.
“I think it's a natural thing,” Robertson said. “I think it happens when the market's tight. The market is not flush with refis. I think if the rates come way down, and the market starts to explode again with refinances, then that's when a lot of small lenders start to pop up. A lot of small people start to make money in the space, and then that's just kind of the natural ebb and flow of mortgage.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
