Crypto Mortgages Let Homebuyers Keep Bitcoin, Put Down Nothing

[Fortify]

This following is also interesting:

Milo wants to make such loans a big business by pooling them and selling them to banks, asset managers and insurance companies, maybe even offering them as bonds in a securitization, according to founder Josip Rupena.

Historically we have not seen mainstream crypto support for real estate, car and student loans.

This could represent an expansion into home and real estate loan markets. Although for some reason, I doubt it'll enjoy mainstream support. Crypto whales are the only income bracket that can participate in these programs. If they buy real estate, it will be in a country that is expected to support more friendly regulation towards bitcoin and crypto, I would guess.

The subprime mortgage crisis of 2008 was fueled by a bubble of CDOs that were vaguely similar to using crypto as loan collateral. In that case the assets were leveraged and spread across a much larger consumer demographic which greatly multiplied the damaging effects. There may also be parallels with Elon Musk using his tesla stock as collateral to buy twitter.

Much of these programs appear to be concentrated in florida which appears to be emerging as a crypto friendly hotspot.

Let's face it, this is barely going to affect many people at all and I'd be surprised if more than a hundred people ever take up such an offer. However it names for a nice marketing gimmick for the bank involved. The terms are weighted heavily towards the bank and a 14% interest rate is obscene, you'd be much better off just selling your bitcoin - taking a calculated hit on taxes - and buying the house outright. It is basically using a high volatility asset to fund a relatively low volatility asset with onerous terms to the borrower.

[Welsh]

14% interest rates? Only nearly 3 times more than the national average? Lol, what a deal!

Absolutely crazy interest rates. Terrible deal, surely not that many people will want to use these types of loans with that sort of interest? The thing is for longer term loans, i.e a mortgage you're probably looking at fixing yourself in at a certain interest rate, and then after that you're probably going to be subjected to even more.

Yeah, I'm sorry absolutely terrible idea from bottom to top.

Hopefully this does not catch on among the population, because if people start paying for their homes using crypto installments (and people are notoriously bad at mortgages even with paper money), then I can see another 2008 rumbling in the next few years when the entire bubble pops again. Followed by the obligatory anti-crypto wave of sentiment this will cause.

I doubt it, with interest rates like that. Also, there's some just a better market out there already with fiat loans. However, I'm a firm believer that we're already heading for a huge recession, probably bigger than 2008/2009. I just talked about it in the speculation section, but basically the governments have offered incentives to keep the ball moving in the housing market, but these incentives basically made it more attractive for people to put less down, and basically stretch their budget, when the interest rates ramp it up, which they will a lot of people are going to be struggling. Imagine, if you secured a Bitcoin loan at 14%, then a recession kicks in, I would suspect these companies would be looking to increase it the next time you have to mortgage, as I suspect they'll be working on a fixed term period, and then renegotiating the loan.

[justdimin]

14% interest rates? Only nearly 3 times more than the national average? Lol, what a deal!

Absolutely crazy interest rates. Terrible deal, surely not that many people will want to use these types of loans with that sort of interest? The thing is for longer term loans, i.e a mortgage you're probably looking at fixing yourself in at a certain interest rate, and then after that you're probably going to be subjected to even more.

Yeah, I'm sorry absolutely terrible idea from bottom to top.

The difference is that we are paying premium for that since it is a brand new deal. Yes, 14% is a big amount if we are talking about a rare situation where dollar would be the only thing or an item would be the only thing you show as collateral, but when you are doing it for what bitcoin could mean to the bank then they will make it a bit higher because it is a new idea and a new type of loan and collateral.

So, for the time being if you believe that it would be smarter to keep your bitcoins and pay a premium amount of interest, just so that you could earn even more if you held bitcoin then it would be a good idea to pay that high rate, if not then cash in your coins.

[stompix]

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Absolutely crazy interest rates. Terrible deal, surely not that many people will want to use these types of loans with that sort of interest? The thing is for longer term loans, i.e a mortgage you're probably looking at fixing yourself in at a certain interest rate, and then after that you're probably going to be subjected to even more.

Yeah, I'm sorry absolutely terrible idea from bottom to top.

Now letting my bias for a moment, there is a target population, as it's always the case with loans and it's in most cases people who have no other options, and people who strongly believe their coins will do an x3 or x5 after the next halving and don't really do the extra math when it comes to a 5 years loan. 14%? But I can put some coins in some staking scheme and get just from that 10-20 APR, enough to cover the interest. Taking such a loan when Bitcoin was $10000, great idea, right? Taking one when it was 60k...

There are takers, and unless Celsius and others are lying, there are thousands who would take such long-term loans. Of course, you have to take those numbers with a grain of salt, but seeing that they manage to lose $54 Million in one event and still stay afloat, seems the scheme is lucrative enough.

Oh, and one more thing, to us it does seem like a lot but for other countries, it seems like a small rate, some will realize too late that the interest is in $ and that is added on top of their currency devaluation, quite a few will end trapped because they've never had a second thought on this.