Florida-based research firm Weiss Ratings has published a report warning US citizens about the risks associated with cryptocurrency mortgages.
In particular, in report Miami-based digital banking startup Milo is noted for offering its customers up to 30-year mortgages backed by bitcoin, ether or stablecoins as collateral. At the same time, the company does not require a down payment, and promises interest rates on loans from 3.95% to 5.95%.
Weiss Ratings analyst Jon Markman urges caution in such mortgage offerings as stocks and digital currencies this year, as well as the US housing bubble and rising interest rates, could weigh against clients. In addition, according to Markman, the upcoming changes in the Fed’s policy will greatly affect the cryptocurrency market.
“Based on the belief that real estate prices and cryptocurrencies will continue to rise, this option may seem like a win-win. However, we believe that such a scenario will not happen. Bitcoin has fallen by 40% since November last year and, apparently, will continue to fall,” the expert said, adding that US mortgage rates will continue to rise.
At the same time, Markman emphasized that most of the risks associated with cryptocurrencies are now in the real estate sector, while simple cryptoinvesting can still be profitable.
Markman suspects Milo could potentially pool home loans backed by cryptocurrencies and offer them as bonds to asset managers and insurance companies. The expert noted that such a strategy led to the collapse of the housing market in 2009.
Earlier, Massachusetts Senator Elizabeth Warren suggested that the US accelerate the development of a digital dollar, drawing a parallel between the crypto industry and the economic crisis in 2008.
Source: Bits
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