Warning over new Bitcoin home loans

Perth Now

7 days ago

Australians have a new way of getting into the mortgage market via their Bitcoin holdings, but potential homeowners are being urged to take a deep breath before jumping into one of these products.
In an Australian first launched last week, Bitcoin holders can use the asset like they would traditional money for a home loan.
Mortgages Plus director and principal Chris Dodson told NewsWire that cryptocurrencies were maturing as an asset class, but he urged caution when using them for a home loan. Australians are being urged to weigh up the pros and cons of new Bitcoin-backed loans. Close-up generic Credit: istock
'I like the idea of people thinking of innovation and reassessing digital currencies as an asset class,' he said.
'But the volatility is a concern, as it wasn't too long ago Bitcoin fell below $US100 and two weeks later it's up to $US120,000, so that was a pretty wild swing.'
Mr Dodson said the new launch was 'not a bad thing' but wanted to make sure everything was signed off prior to considering it for clients.
'I welcome the innovation and recognise the asset class is maturing but also we need to make sure our clients are looked after,' he said.
Block Earner said it would become Australia's first Bitcoin-backed home loan provider after winning a lengthy court case with ASIC, successfully arguing it did not require a financial services licence to offer its products.
In a statement, Block Earner said it would continue to work collaboratively with the regulators to bring clear benefit to Australian consumers.
'Block Earner continues to operate business-as-usual and remains fully committed to compliance, innovation, and building products that benefit Australian consumers,' it said.
With the court proceedings out of the way, Block Earner is set to launch Australia's first Bitcoin-backed loan, which it says will help with Australia's housing affordability woes. They are the first in Australia. NewsWire /Joel Carrett Credit: News Corp Australia
Interest rates will start at 9.50 per cent per annum with a 40 per cent loan-to-value ratio (LVR) and comparison rates of 11.93 per cent per annum with an 80 per cent LVR.
The fixed rate is 11.50 per cent per annum for 12 months with 50 per cent LVR, while the comparison fixed rate is 12.17 per cent with 80 per cent LVR.
But mortgage holders will still be able to hold onto their Bitcoin.
This could mean they benefit from any potential upswing or owe more if the value of Bitcoin falls.
'Traditional affordability metrics, based on wage growth and Australian dollar figures, suggest a worsening housing crisis,' Block Earner said.
'But when homes are priced in inflation-resistant assets such as Bitcoin and gold, the picture shifts, and long-term holders of these assets may find their relative purchasing power has increased.
'In 2016, the average Australian home cost 627 BTC (bitcoin) or approximately 350 ounces of gold. By 2024, that had dropped to just 4.3 BTC or approximately 170 ounces of gold.'
Block Earner chief executive and co-founder Charlie Karaboga said last week the launch of crypto-backed home loans was a turning point for property finance and digital assets.
'Crypto holders shouldn't have to choose between holding Bitcoin and buying a home,' he said.
'We're giving them a smarter option, a way to put their crypto to work without giving it up.
'This product isn't just innovative, it's inevitable.'