Fannie Mae (FNMA) is reportedly teaming up with Coinbase (COIN) and Better Home & Finance (BETR) to launch a new product that will allow homeowners to use their crypto holdings as collateral to secure a Fannie-backed home loan.
BETR’s stock jumped as much as 5.6% in pre-market trade despite weakness in the broader market. Retail sentiment on Stocktwits, around the lender, remained in ‘bearish’ territory over the past day. Chatter rose to ‘low’ from ‘extremely low’ levels.
According to a report by The Wall Street Journal, homeowners can pledge either Bitcoin (BTC) or stablecoin USDC (USDC) in order to get a mortgage, but the overall cost may be higher than taking the traditional route.
How To Get A Crypto-Backed Home Loan?
The report said a person looking to purchase a house would first have to get a 15 or 30-year Fannie Mae-backed mortgage from Better. Instead of using cash for down payments, they can now take out a separate loan in USDC or Bitcoin. It added that the combined interest rate on both loans would like increase the overall cost of homeownership by around 1.5 percentage points as compared to a normal mortgage.
Homeowners will reportedly not be able to trade the cryptocurrency assets they have pledged either, which would be detrimental if the price of Bitcoin were to rise but beneficial if it tumbled.
FNMA’s stock edged 0.3% higher in pre-market trade despite weakness in the broader market. Retail sentiment around the stock dipped to ‘neutral’ from ‘bullish’ territory over the past day, accompanied by chatter at ‘high’ levels. Meanwhile, shares of Coinbase fell 2.25% in early morning trade.
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