From now on, the use of housing loans for Crypto investments is prohibited by the Australian Bank of Queensland. The financial institution has stated that the ban has been enacted due to the high-risk of these kinds of investments.
13 July, AtoZ Markets – The Australian Bank of Queensland has prohibited property buyers from using home equity to purchase cryptocurrencies.
Australian Bank bans use of Housing loans for Crypto investments
The Bank of Queensland has reportedly decided to ban credit lines from loans to be used for leveraged purchases or trading of digital currencies. The financial institution has stated that the ban has been enacted due to the high-risk of these kinds of investments. The bank has also stated that leveraged currency trades can appear beneficial; yet, these can also lead to huge losses.
The bank currently is updating its loan contracts, while cautioning customers that “any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable”.
Borrowers were able to access loan money from a property to buy cryptocurrency by using redraw features that come with a mortgage. In addition, the borrower could access extra payments to their loan accounts that surpass minimum required payments.
According to online reports in Australia, most of the lenders provide the service on variable rate accounts. Usually, there are no fees in case the user submits the request to access money from a redraw online. Another popular way of using loans to buy cryptos was the establishment of a line of credit. Borrowers could draw on a line of credit using property equity like an ATM or buyers agent.
Banks Oversee Crypto Loans
Online reports state that a mortgage broker that is familiar with the market stated that bankers are making inquiries and tracking borrowers’ accounts in order to warn them about cryptocurrency trades and about funds movements. The brokerage has reportedly stated that “they are concerned because the Australian Taxation Office, Treasury, the Reserve Bank of Australia and Austrac are crawling all over it.”
Moreover, the same report states that most of the lenders carry on with monitoring crypto loans, adding that they do not ask clients how they use borrowed funds.
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