Under the pressure of high housing prices and the rise of crypto assets, Australian startup Block Earner has launched the nation's first 'Bitcoin-backed mortgage' scheme, allowing holders to acquire real estate without having to sell their assets, and redefining the assessment of assets and credit. This not only creates new ways for mortgages and finance but also reveals the potential trend of the integration of the housing market and digital assets.
Use Bitcoin to pay for a down payment on a house, no need to sell coins to move in easily.
Due to the soaring housing prices in Australia, a local startup called Block Earner is launching Bitcoin-backed mortgages, providing cryptocurrency holders with a new way to enter the real estate market without selling their assets.
Through this new product, users can pledge their Bitcoin and have it custodially managed by the third-party digital asset platform Fireblocks, using this to borrow up to 50% of the property value in cash from Block Earner as a down payment, while the remaining mortgage portion will still be handled by traditional financial institutions.
Block Earner offers lending services for up to four years, during which only monthly interest payments are required, and repayments can be made in cash or cryptocurrency, with the option for early settlement. The remaining mortgage portion will still be handled by traditional financial institutions.
(Can crypto assets be loaned? JPMorgan plans to allow cryptocurrencies as collateral for ETF lending.)
What about price fluctuations? Block Earner has set up three safety locks.
In the face of extreme fluctuations in Bitcoin prices, Block Earner has established a three-tier protection mechanism to reduce liquidation risks:
Loan-to-Value Ratio (LVR) must be below 60%: The loan amount cannot exceed 60% of the market value of the pledged Bitcoin.
30-day grace period mechanism: If the price of Bitcoin falls and causes the LVR to exceed the limit, borrowers have 30 days to correct the ratio through additional cash or BTC.
Partial liquidation: If the amount is not supplemented after the due date, the platform will only sell part of the BTC to maintain the 60% ratio, and the property itself will not be affected.
This design avoids the common full liquidation risks associated with crypto lending protocols, allowing users to further participate in the real estate market while maintaining exposure to Bitcoin.
From the perspective of Bitcoin: Housing prices are getting cheaper year by year.
James Coombes, co-founder of Block Earner, pointed out that the past financial system equated good credit with 'having a stable salary, cash deposits, or retirement funds', but this assessment standard overlooks the potential wealth of crypto holders:
They have already prepared, but traditional finance has not seen them, and this mortgage product will be key to turning dormant assets into real liquidity.
In fact, when priced in Bitcoin, Australian housing prices have actually been declining. Block Earner pointed out: 'In 2016, the average house price was 627 BTC, and by 2024, it had dropped to only 4.3 BTC.'
In other words, as fiat currency continues to inflate and housing prices rise year by year, Bitcoin has instead accumulated purchasing power for holders, making this service even more compelling.
Is America also getting involved? FHFA explores crypto-backed mortgages.
It's not just Australia; the United States has also started to take action. In June of this year, Director William Pulte of the Federal Housing Finance Agency (FHFA) requested mortgage institutions Fannie Mae and Freddie Mac to study whether 'crypto assets in custodial exchanges' can be included in the collateral asset assessment standards.
In addition, the U.S. House of Representatives has recently introduced a bill proposing that mortgage institutions must recognize the value of crypto assets when calculating credit risk, without the need to convert to U.S. dollars, indicating that traditional finance is gradually recognizing the credit value of crypto assets.
(Big Short? The U.S. Federal Housing Finance Agency has classified cryptocurrencies as risk collateral for mortgages.)
Alternative solutions under uncontrolled housing prices, why are crypto assets worth including?
Both Australia and the United States are facing a severe housing crisis, with the median house price in Sydney being 14 times the annual income of a household, while in the U.S. it has reached 7 times the annual income. As it becomes increasingly difficult for the average person to accumulate a down payment through salary, a population with substantial cryptocurrency assets but insufficient cash has also become a new blue ocean in the mortgage market.
In this context, Bitcoin-backed mortgages are not only a product innovation but may also be a turning point in the system. As the financial system begins to recognize the value and liquidity of cryptocurrencies, it also signifies that digital assets are entering the real economy.
This article: Australia's Block Earner launches the first Bitcoin-backed mortgage: Priced in BTC, housing prices are getting cheaper and first appeared in Chain News ABMedia.
