Crypto gains help low-income households secure mortgages
A U.S. Treasury study highlights that low-income households are increasingly using cryptocurrency gains to secure larger mortgages, reflecting a significant financial trend.
According to research conducted by Samuel Hughes, Francisco Ilabaca, Jacob Lockwood, and Kevin Zhao for the Office of Financial Research, these gains are enabling higher down payments in areas with substantial crypto exposure.
The study, published on November 26, revealed that low-income households in "high-crypto" zip codes—defined as areas where more than 6% of households reported crypto tax events—experienced a 250% increase in mortgage origination rates.
Average mortgage balances in these regions also grew by 150%, rising from $172,000 in 2020 to approximately $443,000 in 2024.
“Zip codes with the highest crypto exposure saw the largest increase in mortgage and auto loan originations and balances over subsequent years,” the researchers emphasised.
They further noted that debt-to-income ratios in these areas surpassed recommended levels, indicating potential financial vulnerability.
However, delinquency rates remain low, suggesting no immediate financial distress.
The report also warned of future risks, stating, “High crypto exposure may be associated with behavior that may contribute to financial instability.”
Elevated leverage levels among low-income households could pose significant risks in the event of adverse economic conditions or a cryptocurrency market crash.
Despite these concerns, the study found no evidence of current distress among crypto-exposed households.
“The increased debt balances and leverage among low-income households with crypto exposure warrant close monitoring for future financial risks,” the researchers concluded.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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