The Federal Housing Finance Agency (FHFA) has initiated a study on how cryptocurrency can help borrowers improve their chances of qualifying for mortgages against the backdrop of a housing crisis.
Decline in US Mortgage Applications
Recent data shows a sharp decline in new mortgage applications in the US, linked to various economic issues. Over the last 50 years, homeownership rates have remained around 62%, although the number of applications has sharply decreased. Key reasons for this decline include a lack of new housing construction, high interest rates from the Federal Reserve, and increased housing purchases by investors.
Potential Changes in Lending
The prospect of using cryptocurrencies as collateral for mortgage loans could significantly alter the lending landscape in the US. FHFA head Bill Pulte stated that the agency will study how cryptocurrency assets can be used to improve borrowers' chances of obtaining mortgage loans. This could make federal lending programs more accessible to a larger number of citizens.
Who is Interested in Crypto Loans?
While there are a few lenders offering crypto-backed loans, such as Milo and Strike, they primarily cater to investors and may not be suitable for everyone. Some experts note that such use of cryptocurrencies could pave the way for mortgage loans for a broader range of borrowers who currently cannot secure financing through traditional banks.
The FHFA's exploration of cryptocurrency for mortgage use could be a significant step towards a more flexible approach to lending, especially amid the current housing crisis.
