High Stakes, Higher Mortgages: Crypto’s Role in Homebuying Trends

The report, prepared by researchers Francisco Ilabaca, Samuel Hughes, Kevin Zhao, and Jacob Lockwood, highlights how these financial gains have enabled larger down payments, facilitating access to substantial mortgages.

Areas identified as "high crypto exposure" have witnessed a rise in mortgage acquisition among lower-income groups. Specifically, the proportion of these households with home loans surged by over 250%, with average mortgage balances increasing from approximately $172,000 in 2020 to around $443,000 by 2024—a jump of 150%.

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High crypto-exposure zip codes—defined as those where more than 6% of households reported cryptocurrency-related tax events—saw the most significant increase in mortgage and auto loan originations. The Treasury study attributes this trend to the influx of crypto-related wealth in these areas.

However, it also points out potential risks tied to such behavior. In many of these regions, low-income families have reported mortgage debt-to-income ratios that exceed recommended thresholds.

While this raises concerns about financial resilience, delinquency rates have remained low so far, indicating that these households are not currently experiencing severe financial distress. Nevertheless, researchers caution that this high leverage could become problematic if broader economic conditions deteriorate or the volatile crypto market crashes.

The report emphasizes that while there is no immediate evidence of financial instability among these households, the increased reliance on high-leverage loans signals potential risks. The researchers stated:

Rising distress in this group could cause future financial stress, especially if exposure to these types of high-leverage, high-risk consumers is concentrated in systemically important institutions.

While cryptocurrency has opened doors for many low-income households, it continues to influence various sectors. Just recently, Rumble made headlines with a $20 million Bitcoin investment, raising questions about its impact on treasury strategies. What drove this daring bet? Read the full story.