- Low-income households in high-crypto areas see a 150% rise in mortgage balances.
- Elevated debt-to-income ratios in these areas raise financial stability concerns.
- Household debt hits $17.9 trillion in Q3 2024.
The United States (US) Treasury’s Office of Financial Research has reported that lower-income households are increasingly using cryptocurrency gains for mortgages.
Researchers Samuel Hughes, Francisco Ilabaca, Jacob Lockwood and Kevin Zhao conducted a study that reveals a significant change in borrowing patterns among low-income households in areas with high crypto exposure.
Mortgage activity in these areas has significantly increased. The percentage of low-income households with mortgages has risen by 250%. The average mortgage balance has surged from about $172,000 in 2020 to $443,000 in 2024, a 150% increase.
In the study, “high-crypto” zip codes are defined as those where over 6% of households report a crypto-related tax event. Data indicates that in many regions, auto loan originations and outstanding balances have increased significantly.
The trend raises concerns about financial stability, as the household’s mortgage debt-to-income ratios in these areas seem to exceed the recommended levels. However, delinquency rates in cryptocurrency-exposed areas are quite low, with little or no evidence of near-term financial stress.
Experts warn that high leverage levels create risk in an economic downturn or during a cryptocurrency market collapse. The report emphasized the need to monitor finance and leverage in low-income households with much crypto exposure.
Q3 2024 advisor pulse survey
US household debt is at an all-time high, reflecting the growing interest in digital assets among financial advisors and clients. Total US household debt reached a record $17.9 trillion in Q3 2024, as the Federal Reserve Bank of New York reported. This rise is mainly due to increased balances in mortgages, auto loans, credit cards and student loans.
A recent survey by the Digital Assets Council of Financial Professionals (DACFP) and Franklin Templeton Digital Assets shows a notable change in financial professionals’ attitudes toward cryptocurrencies.
The Q3 2024 Advisor Pulse Survey gathered responses from 619 financial professionals, of whom 61% serve clients with assets between $500,000 and $3.5 million. The survey revealed positive trends in cryptocurrency integration into wealth management.
