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Block Earner will become the first to offer bitcoin-backed home loans in Australia following a lengthy court case with the Australian Securities and Investments Commission (ASIC). The case resulted in the Federal Court determining the company did not require a financial services licence to offer its product.
Block Earner said in a statement that it will continue to collaborate with regulators to support “long-term consumer and market confidence.”
Now prepping for launch, Block Earner will offer loans up to $5 million, with deposit loans up to 60 per cent of the bitcoin’s value.
Customers can pay interest-only for up to four years, either with crypto, Australian dollars, or both.
Loans will be approved within 24 hours with no lock-ins or early repayment fees.
Interest rates 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 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.
The product aims to help Aussies save on lenders mortgage insurance (LMI) by leveraging crypto wealth as a security deposit while also allowing them to maintain crypto exposure.
Block Earner handles the deposit while its lending partner handles the mortgage. Borrowers can now join the waiting list.
With it becoming harder and harder to enter the property market and 32.5 per cent of Australian adults (6.3 million) owning crypto, there is a strong market for crypto-backed home loans.
This is especially true for younger Australians, with 53 per cent of those aged 25–34 owning crypto.
Block Earner CEO and co-founder Charlie Karaboga said the launch of crypto-backed home loans is 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.
This launch of Block Earner comes off the back of a case in the US where two of the country’s biggest mortgage lenders were ordered by the Federal Housing Finance Agency (FHFA) to consider cryptocurrency as an asset when entering a mortgage.
Bridget Nichols, chief operating officer at Monochrome, said the emergence of crypto mortgages will “fundamentally change lending opportunities” for crypto investors.
The regulatory green light given to Block Earner speaks to the growing acceptance of cryptocurrency as an asset.
The growing integration of digital currencies into the financial mainstream is becoming a worldwide phenomenon and could spark plenty of innovative new methods of funding.
[Related: Lagging regulation keeping crypto mortgages subdued]
