Australia Launches Bitcoin Home Loans
Cryptocurrency sector in Australia has grown with the latest introduction into the finance sector being Bitcoin Backed Home Loans.
The digital currency exchange Block Earner has launched the nation’s first Bitcoin backed home loan. This unprecedented offering allows Australians to use their Bitcoin holdings as collateral for home loans, providing a new pathway to property ownership without requiring borrowers to sell off their digital assets.
The launch comes after Block Earner's recent legal victory over ASIC (Australian Securities and Investments Commission) in which the company successfully argued it did not need a financial services licence to offer crypto collateralized loan products. This court decision cleared the way for the official rollout of Bitcoin backed mortgages and has since sparked excitement.
The Bitcoin Home Loan Option
The core concept behind the new offering is simple if you own Bitcoin, you can now use it as loan collateral, rather than selling it to fund a deposit. This means investors retain their exposure to future Bitcoin price increases while gaining access to home loan financing.
As Block Earner CEO Charlie Karaboga explains, “Crypto holders shouldn’t have to choose between holding Bitcoin and buying a home. 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.”
Block Earner’s data supports the idea that Bitcoin could actually improve housing affordability for long term holders. In 2016, the average Australian home cost 627 BTC but by 2024 that number dropped to just 4.3 BTC. Now reflecting Bitcoin’s extraordinary appreciation relative to the property market.
With the average Australian home surpassing AUD 1 million, many crypto investors may see their digital asset holdings as a viable ticket into the increasingly elusive property market.
An Expensive Loan Structure
Block Earner’s crypto backed mortgage operates differently from a traditional home loan. Borrowers don’t cash in their Bitcoin instead, they offer it as collateral in exchange for fiat currency to be used toward a property purchase.
Key loan details include:
Interest rate starting at 9.50% per annum (40% loan-to-value ratio)
Comparison rate of 11.93% (80% LVR)
Fixed rate of 11.50% per annum (12 months, 50% LVR)
Comparison fixed rate of 12.17% (80% LVR)
Importantly, borrowers retain ownership of their Bitcoin, allowing them to benefit from future price increases. But this also introduces a double edged sword because if Bitcoin’s price collapses, borrowers risk liquidation of their crypto to protect the lender’s interest.
While this development is a new dawn for digital finance in Australia, industry experts have raised concerns about volatility and borrower protection.
Chris Dodson, director at Mortgages Plus, applauded the innovation but urged caution:
“Cryptocurrencies are maturing as an asset class, but the volatility is a concern... it wasn’t too long ago Bitcoin fell below US 100 and two weeks later it’s up to US 120,000. That was a pretty wild swing.”
Dodson stressed that any new financial product must first and foremost protect the client and suggested that the product's suitability would depend heavily on a borrower’s risk tolerance and financial stability.
For prospective borrowers, there are several important factors to consider:
Market Volatility: While Bitcoin has a long history of upward price momentum, it is also notorious for extreme fluctuations. If prices plunge, your loan could be forcibly repaid through the liquidation of your Bitcoin potentially at a loss.
High Interest Rates: Compared to traditional home loans, the interest rates on these crypto-backed options are significantly higher. This reflects the added risk lenders bear when accepting volatile assets as collateral.
Loan to Value Requirements: With maximum LVRs around 50% for fixed rates, borrowers need to bring substantial Bitcoin collateral to the table — meaning this option is currently only viable for high-net-worth crypto holders.
Soft Launch Phase: As the product is still in its early stages, there’s limited data on lender behaviour, loan longevity, or long-term borrower outcomes. Regulators are watching closely.
What are your thoughts on this latest development? A Win or too great of a risk?
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Posted Using INLEO