Are UK Lenders Likely to Accept Bitcoin as a Form of Payment?
Using bitcoin for mortgage payments has been a popular topic in recent months. The cryptocurrency has taken the financial world by storm, with some people predicting it will replace the pound and others suggesting it will replace gold. But can you use bitcoin to pay for your next home?
A leading US mortgage lender is considering accepting a cryptocurrency as part of a significant overhaul of its business. Experts advise that UK lenders should also follow suit. Banks and lenders have always had a trusted role in providing us with mortgages. Traditionally, however, all of their decisions are based on their terms and judgement. This has restricted many people from becoming homeowners in the past. But could this change?
Adam Pigott, CEO of property portal OpenBrix, predicted in an interview with FT Adviser: “Bitcoin—and cryptocurrencies more broadly—will have to be considered.”
According to a recent Barclays study, younger people nowadays are not opening high-street bank accounts and are not investing in stocks and shares. Instead, they want easy access to cryptocurrencies and want to be able to open a bank account digitally, which they can do within a few clicks. As a result, the Financial Conduct Authority set aside about £11m on an advertising campaign warning young people about the risks of cryptocurrencies.
The UK mortgage market is worth circa £10.2 trillion, and the value of bitcoin is currently around £466.7 billion.
If a homeowner took out a mortgage to buy their property, they could use bitcoin as part of their repayment. Bitcoin would not be accepted as a deposit by lenders, meaning homeowners would have to find a way to convert it into pounds before paying off their mortgage each month. The process would involve signing up to an exchange such as Coinbase or Coinfloor, which allows users to convert one cryptocurrency into another and vice versa.
A residents’ handover platform for developers, CEO Dharmesh Mistry, said regulators should ensure exchanges followed Know Your Customer regulations if mortgage lenders in the UK began accepting bitcoin as a form of payment. With this in play, it would require withdrawals of over £10,000 to be reported to HMRC.
Not so new, crypto firms can be tricky to regulate. After being deemed “not capable of being effectively supervised”, the FCA has effectively removed several firms’ permissions. The FCA’s move comes at a time when more and more people are beginning to use crypto for their day-to-day dealings. And while some have concerns about how safe these currencies are for everyday use; others see them as an exciting new way of doing business.
Private Finance associate director Chris Sykes is sceptical that UK lenders will accept Bitcoin any time soon. He said: “I think it’s unlikely that we’ll see any UK lenders accepting Bitcoin payment anytime soon. It’s still too volatile and there are many more practical ways to make payments than using this as a method of exchange.”
In the United Kingdom, there are only a few lenders that allow mortgage applicants to use cryptocurrencies as a source of deposit; moreover, they do not typically service the debt with cryptocurrency. As a result, I do not foresee mortgage lenders accepting cryptocurrency in the offing.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
DNACrypto Team
Cryptocurrency & Blockchain Experts
