The first crypto mortgages are already issued. It’s already possible to buy a 30-year-old home in Miami by paying with bitcoin. Since the end of last year, fintech company Milo has only been offering mortgages with Bitcoin and cryptocurrencies for now.

There is a demand for crypto mortgages. This new type of mortgage is well received, there is already a waiting list of 6,000 people willing to buy a property and make their monthly payments in cryptocurrencies.

“We noticed that there are international clients with interesting crypto assets that are struggling to qualify for a traditional mortgage,” explains Josip Rupena, Milo founder and a former Morgan Stanley and Goldman Sachs employee. In other words, there are many people who have huge wealth in cryptocurrencies and cannot use them to buy homes, and this company is giving them a choice.

5.95% interest over 30 years. These mortgages are offered with interest rates between 5% and 7%. According to the example on their website, a mortgage is offered for a million dollar home purchase at an interest rate of 5.95% over 30 years, although they promise rates starting at 3.95%. The mortgage can be closed in two to three weeks, covering 100% of the amount, without any down payment.

The trick: 100% of the requested amount is required in cryptocurrencies. These mortgages have a very specific audience: cryptocurrency investors who have huge fortunes and are looking for a way to turn them into physical assets. Maybe that’s why the requirements are so crazy compared to a traditional mortgage. And Milo requires as much cryptocurrency ownership as a mortgage loan. So if we’re going to buy a million dollar flat, we’re going to be required to have bitcoin-denominated funds equivalent to at least one million dollars. Of course, with the current value of bitcoin at the time of the investment.

everything stays at home. The creators of this crypto mortgage explain that the buyer “does not need to sell the cryptocurrencies and then see how their value has increased over the years.” The basic idea is that everything is organized from cryptocurrencies, with no intermediate changes required. Currently, Milo only accepts buyers from the United States. In Miami, where Francis Suarez is a big proponent of cryptocurrencies, these crypto mortgages have been hailed as a “breakthrough achievement.”

It’s volatility, stupid. In other words, the problem with these mortgages lies in the high volatility of cryptocurrencies. Fortunately, Milo at least lets you claim them with bitcoin. The thing is, if Bitcoin’s value drops, the company will go bankrupt and leave a trail of loss. On the other hand, if Bitcoin goes up, that floor will cost a lot. If we take into account the huge change in bitcoin value in recent years, in 30 years the picture could be very different.

Memories of the subprime mortgage crisis. The warning comes from Nobel Prize laureate Paul Krugman. In a column in the New York Times, he warns that a bubble is brewing with cryptocurrencies, which could lead to something akin to the 2008 crisis with subprime mortgages. One of the arguments used is the lack of knowledge of how the cryptocurrencies themselves work, not so much the financial products based on them. Many did not understand “what they were getting into” at the time, according to Krugman, this is happening again.

on Xataka | Bitcoin, blockchain and cryptocurrencies explained simply (and in the video)