Weiss Ratings issues warning over crypto mortgage risks
Florida-based ratings and research firm Weiss Ratings has fired out a warning over the risks of crypto mortgages amid the current economic climate in the United States.
The company paid particular focus to Milo, a digital banking startup from Miami that offers 30-year mortgages backed by Bitcoin (BTC), Ethereum (ETH), or stablecoins as collateral. The firm requires zero down payments, and its loan rates vary between 3.95% and 5.95%.
In the May 3 report, Weiss analyst Jon D. Markman urged caution with such mortgages, citing the poor performance of stocks and crypto this year, a U.S. housing bubble, rising interest rates, and the Federal Reserve's upcoming policy changes.
“And U.S. property prices now face headwinds from a change in Fed policy and rising mortgage rates,” he added.
Markman did conclude that not all crypto risk is bad, but it could be in the property sector, before adding “no matter what the markets are doing, the potential to succeed in cryptocurrencies is real.”
Many crypto and stock investors have been negatively anticipating the potential market impacts of serious interest rate hikes this year as the Fed aims to reel in inflation.
With both markets suffering from a lackluster performance due to a myriad of factors, macro analysts such as Alex Krueger have boldly suggested that the Fed’s latest announcements set for this week “will determine the fate of the market” moving forward.
Removing the housing market from the equation, if the price of BTC or ETH were to plunge significantly over the next few months, there does appear to be a fair amount of wiggle room for Milo users, however.
According to the mortgage terms and conditions, the price of the collateralized crypto assets “can dip in value with zero
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