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The Hong Kong Monetary Authority's survey reveals a decrease in residential mortgage loans (RMLs) in negative equity by end of June 2024. (Read More)
The Hong Kong Monetary Authority (HKMA) reports a 17.2% decline in mortgage applications for June 2024, with significant decreases in loan approvals. (Read More)
The Hong Kong Monetary Authority reported a 16.1% decrease in mortgage applications for May 2024, while mortgage loans approved increased by 8.8%. (Read More)
The Hong Kong Monetary Authority has expanded the eligibility criteria of the Mortgage Insurance Programme. (Read More)
The Hong Kong Monetary Authority (HKMA) announces technical adjustments to countercyclical macroprudential measures for property mortgage loans. (Read More)
What are crypto-based mortgages?
Crypto-backed mortgages are a kind of loan where borrowers use their cryptocurrency holdings, such as Bitcoin (BTC) or Ether (ETH), as collateral to secure financing for real estate purchases. This approach allows you to access funds without selling your digital assets. By retaining crypto ownership, borrowers can still benefit from future price increases.
There are various types of crypto-backed mortgages: purchase mortgages, cash-out refinancing and bridge loans.
Crypto mortgages are particularly appealing if you want to preserve your holdings while securing real-world assets. However, you need to consider the volatility of cryptocurrencies and carefully assess the risks before opting for a crypto-backed mortgage.
Lenders usually accept stablecoins such as Tether (USDt) and USDC (USDC) or major cryptocurrencies like BTC and ETH. Some lenders may accept a diversified portfolio of cryptocurrencies as collateral, which is known as cross-collateralization.
Did you know? With traditional mortgages becoming increasingly difficult to obtain, particularly for younger individuals, alternative solutions are gaining traction. Fintech startups are addressing this demand by offering adjustable or fixed-rate mortgages secured by substantial cryptocurrency holdings.
Crypto-based mortgages vs traditional mortgages
Crypto-backed and traditional mortgages differ from eligibility requirements to risk factors. Traditional mortgages rely on credit history, income verification and down payments, while crypto-backed mortgages use digital assets as collateral.
The approval process for crypto mortgages is often faster, but they come with higher interest rates and volatility risks. Additionally, regulatory uncertainties make crypto-backed loans less widely accepted in real estate markets. A comparison of the two mortgage types is given below:
How do crypto-backed mortgages work?
The basic mechanism of crypto-backed mortgages is that depositors calculate the value of the crypto the borrower proposes to collateralize and release a loan against the amount.
To assess the value of the crypto assets, the lenders may apply a loan-to-value (LTV) ratio, which indicates the percentage of the collateral value you can borrow.
For example, if the LTV ratio is 50%, you can secure a loan of $25,000 for collateralized crypto assets worth $50,000. Overcollateralization helps to create a buffer, which helps the lender if the value of the collateral goes down. Smart contracts are used to automate the execution of loan terms.
Here is a step-by-step look at the functioning of crypto-backed mortgages:
Did you know? Freddie Mac data shows that when fixed-rate mortgages were introduced in 1971, interest rates were about 7.5%. However, by 1980, they had dramatically increased to almost 20%.
Benefits of crypto-backed mortgages
Thanks to crypto-backed mortgages, you can access funds to invest in real estate without selling digital assets. You can leverage your crypto assets to take advantage of real estate market growth.
Here are some key benefits of using a crypto-backed mortgage:
While crypto-backed mortgages offer some unique advantages, they also come with several challenges you must consider. From price volatility to regulatory uncertainties, these factors can impact the feasibility and cost of securing a mortgage with cryptocurrency.
Here are some key challenges in crypto mortgaging:
Did you know? With $12.1 trillion in outstanding mortgage debt spread across 84 million loans, the average American mortgage holder owes $144,593. These home loans represent a massive 70.2% of all consumer debt in the US, highlighting their crucial importance to the nation’s financial health.
How to decide on a crypto-backed mortgage?
Before deciding on your cryptocurrency-backed mortgage, you need to make a thorough assessment of your financial status and risk tolerance.
Begin by analyzing your cryptocurrency portfolio. Determine how much of your holdings you could pledge and consider how these assets may perform in the future.
Given the volatility of cryptocurrencies, collateralizing a single asset may be risky. Diversifying your collateral across various cryptocurrencies may help avoid potential losses if prices fluctuate.
You also need to carefully analyze the loan terms. Understanding the interest rates, payback plan and any other expenses related to the mortgage is essential. Consider the risks, such as asset liquidation if their value falls dramatically or if you fail to meet repayment terms.
As crypto-backed mortgages are a relatively new financial instrument, seeking professional guidance may help if you feel unsure about it. Consulting with financial and real estate experts specializing in crypto lending can assist you in navigating the process, structuring your loan and aligning your mortgage decision with your long-term investment and financial objectives.
Cryptocurrency-backed mortgages are a novel financial tool that leverages digital assets such as Bitcoin or Ethereum to secure a traditional mortgage loan. This emerging trend provides an innovative way for cryptocurrency investors to access liquidity without needing to liquidate their holdings. In a crypto-backed mortgage, borrowers pledge their cryptocurrency holdings as collateral for a fiat [...]
The post Unlocking the Power of Crypto-Backed Mortgages: A Comprehensive Guide to How They Work appeared first on Crypto Breaking News.
According to multiple reports, First Republic Bank is facing significant financial difficulties and could be taken over by the Federal Deposit Insurance Corporation (FDIC) if private sector banks do not intervene. The FDIC has reportedly approached several large commercial banks regarding purchasing First Republic after the bank’s stocks dropped more than 50% on Friday. FDIC [...]
The post First Republic Bank Faces Potential Takeover by FDIC Amidst Financial Struggles appeared first on Crypto Breaking News.
The Bank of England made an impactful move last Thursday, June 22, 2023, as it raised the benchmark bank rate to 5%, marking a significant 0.5 percentage point increase. This decision catapults the central bank’s rate to its highest level since 2008 and represents the most substantial surge in three months. Coinciding with this development, [...]
The post Study Shows Bank of England’s Rising Interest Rates Threaten 1.2 Million UK Households With Insolvency appeared first on Crypto Breaking News.
BTC margin and option markets show no signs of discomfort or overconfidence despite 28% gains in two days.
Silicon Valley Bank (SVB) has become the center of attention after its collapse prompted the U.S. Federal Deposit Insurance Corporation (FDIC) to shut the bank down on Friday. It was the largest U.S. bank failure since 2008, and various alleged catalysts have been pointed to. Some believe venture capitalists caused a bank run, while others [...]
The post ‘Fiat Is Fragile’ — Silicon Valley Bank’s Collapse Sparks Finger-Pointing and Concerns of Contagion appeared first on Crypto Breaking News.
The Global Financial Crisis was a widespread economic downturn that began in 2008 and resulted from the collapse of the housing market and investment banks.
Investors and prospective home buyers will soon be able to take out crypto-backed mortgages to buy real estate in the United States Moon Mortgage, a cryptocurrency lending platform, has raised a $3.5 million seed round to bring two key products to market, including an innovative mortgage lending product aimed at crypto holders.
The post Moon Mortgage lands $3.5M investment to provide crypto-collateralized mortgages appeared first on CryptoSlate.
Weiss Ratings has issued a warning regarding the risks of crypto mortgages. One of the companies that the firm placed ...
Weiss analysts are wary over the usage of volatile crypto assets as collateral for long-term property loans.
Milo, a financial technology company that reimagines mortgage credit, removes the obstacle for down payments if homebuyers use crypto holdings as collateral for home loans. (Read More)
Bitcoin as an asset is a perfect form of collateral and will likely be used to provide financial backing for mortgages and other forms of debt.
Figure now enables customers to leverage cryptocurrencies to purchase real estate. (Read More)
In an exclusive interview with Daily Coin, the CEO of TerraZero, Dan Reitzik explained how to look for opportunities in the metaverse and obtain digital land.
More innovations keep springing up to fascinate and intrigue digital investors with increased cryptocurrency adoption. In line with that, Milo, a fintech startup based in Miami, introduced the first global crypto mortgage. Through the bank’s offer, digital investors have the opportunity of buying real estate in the U.S. by using their cryptocurrencies. The offer from Milo, a digital bank, runs as 30-year mortgage loans. These are currently accessible to customers that could place collaterals with Bitcoin. This offer is open to both Americans and other investors to acquire real estate in the United States. Related Reading | Has Bitcoin Reached Its Bottom? Analyst Says It Still Has A Long Way To Go According to the official website of Milo, the bank advises that customers don’t have to qualify for the mortgage through the sale of their crypto holding for a down payment. Instead, using a crypto mortgage will help you leverage your assets to invest in real estate. Some customers have received loan grants from Milo as part of an early-access stage. Subsequently, the digital bank anticipates that its service will get to most applicants on its waiting list. In January 2021, the digital bank generated $6 million from investors. Including Metaprop, 10X Capital, and QED Investors in seed funding. Currently, the amount of BTC for footing a loan or the collateral to balance the volatile nature of the cryptocurrency is unknown. Unfortunately, Milo is yet to disclose this information. What Inspired The Cryptocurrency Mortgage? Milo’s CEO and founder, Josip Rupena, mentioned the origin of the vision for the crypto mortgage. He said that it came from the numerous experiences of customers who cashed out their Bitcoin token for buying property. However, they will later discover a rise in the value of BTC after their cash out. Furthermore, the digital bank already has millions of dollars generated from its other mortgage solution for international customers. This now has several applicants from more than 63 countries. Through this service, non-U.S.-based users can remotely close their housing loans. They do not need to move to the U.S. or any embassy. The Mayor of Miami, Francis Suarez, stated that the BTC mortgage stands as a milestone to enhance U.S. dominance with the Bitcoin ecosystem. Mayor Suarez said this on Monday during an introduction of Rupena at the North American Bitcoin Conference. Moreover, commended Milo for its innovative ideas, saying that it’s one of the companies needed to push Miami as the Capital. Related Reading | Bitcoin Whales Take Advantage Of Market Crash To Gobble Up Millions In BTC Before Milo, there has been a previous move towards a crypto mortgage. United Wholesale Mortgage, in August 2021, initiated an action for crypto mortgage repayments in its pilot program that was using both BTC and ETH. However, the company later abandoned its plans by October due to uncertainty in regulation. Featured image from Bitcoin Magazine, charts from TradingView.com
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