It’s no secret that buying a home is expensive. According to the St. Louis Fed, the average sales price of homes in the United States has hovered around $400,000 since the end of 2021.
Most homebuyers looking to cover that cost turn to mortgage lenders, who scrutinize financial details such as paychecks, bank balances and retirement accounts to determine how risky it is to lend money.
That review process has typically excluded cryptoassets. But for the roughly 15% of Americans who invest in digital assets, that could soon change.
A directive issued by the Federal Housing Finance Agency in June ordered mortgage giants Fannie Mae and Freddie Mac to develop proposals to consider cryptocurrencies as assets in risk assessments for single-family homes.
Bill Pulte, the agency’s director, wrote in a post on X that he has ordered the companies to prepare to count cryptocurrencies as mortgage assets. Pruitt said the directive was issued “after extensive research and in line with President Trump’s vision to make the United States the crypto capital of the world.”
Darryl Fairweather, chief economist at Redfin, said the process is similar to how lenders account for stocks and other investments.
“Lenders are looking at the assets held by potential borrowers, and whereas before they may have only looked at traditional types of investments like stocks and bonds, now they’re going to look at those less traditional crypto investments as well. And I think it’s a little more difficult for them to assess risk, but I think they’re used to assessing risk,” Fairweather said. “There are stocks that are even more volatile and riskier than some of the long-standing cryptocurrencies, so I think it would be very easy for lenders to adapt their frameworks to include cryptocurrencies there.”
FHFA’s move received immediate support from Sen. Cynthia Lummis, R-Wyo., who introduced a bill to codify the directive.
The directive from the Federal Financial Services Agency also faced criticism from those who argue that crypto-backed loans could add new stress to the mortgage lending market.
In July, a group of Democratic senators sent a letter to Pruitt objecting to his “dangerous proposal” to allow non-convertible crypto assets in mortgage underwriting. The senators asked for information about his directives to Fannie Mae and Freddie Mac and expressed concerns that cryptocurrencies are more volatile than traditional assets. They emphasized that Congress and the public need to better understand the agency’s decision-making process and evaluate the potential risks and benefits of the order and the impact on the housing market.
Watch the video above to learn why the Trump administration wants to allow crypto-backed mortgages and what that means for the housing market.
