When mortgage? Big UK banks split on giving home loans to the crypto-rich

Lovers of bitcoin like to talk about cryptocurrency investments in terms of how many Lamborghinis they could buy with their profits. They rarely talk about buying a house.

In the United Kingdom, that may be partly because some of the country’s biggest mortgage lenders do not view the proceeds of liquidated crypto investments as an acceptable means of financing a deposit on a new home.

Lloyds Banking Group and Santander – which based on 2019 data published by Statista represent a combined 28.7% of the gross mortgage lending market in the U.K. – do not accept deposits sourced through the sale of crypto, and so would not approve mortgage applications in such instances, according to people familiar with the matter. Halifax, Bank of Scotland and Lloyds Bank all sit within Lloyds Banking Group.

Rival banks, however, are more willing to play ball. NatWest Group, which accounts for 12.5% of U.K mortgage lending, will accept deposits from the crypto-rich – but only when these meet certain criteria. A spokesperson for the bank told The Block that the source and credibility of any deposit “must be confirmed and recorded” at the point of sale. 

“Therefore while we do not exclude cryptocurrency sale as a source of deposit, customers may be asked to evidence the credibility of the funds (i.e. the build-up of funds over time similar if they used sale of stocks and shares),” they added.

NatWest’s spokesperson said there had been no change in its credit policy to allow for the use of crypto proceeds. It is not clear, however, exactly how long the policy has been in place.

Nationwide Building Society, which accounts for 12.6% of the U.K. mortgage market, has received a “very small number” of requests to use cryptocurrency as a deposit, and has generally been able to accept these, according to a spokesperson.

“Given the greater complexity of assessing the source of the deposit, any such requests are dealt with on a case-by-case basis. To consider allowing a borrower to use a cryptocurrency for their deposit, the society needs to undertake a number of detailed checks,” they added, explaining:

“These include checking the person has the right to the asset, what funded the source of the investment and where the funds are held now. Only after the source of the cryptocurrency is understood and evidenced would the Society consider making an offer.”

A person close to Barclays, which accounts for 9.3% of the U.K. mortgage market, said the bank will also accept the proceeds of a crypto sale as a deposit, provided it clears “fraud, legal and regulatory checks”. If Barclays has concerns over the origin of funds, applicants will be referred to its fraud team for review.

It is not clear exactly how much demand there is among crypto investors for mortgages in the U.K. But Henry Burrows, a co-founder of Alaco Analytics, told The Block that his company has been producing a growing number of proof of funds audits on the proceeds of bitcoin investments.

“Over the last 12 months, banks have been assessing the digital asset sector and some are now ready to pull the trigger. The increase in bitcoin-backed house purchases is a definite sign of this, with banks and solicitors working with the industry to assess risks and establish proof of funds,” he said.

On the other hand, a spokesperson for Stephensons Solicitors, a U.K. law firm, said it has seen just one instance of a client using the sale of bitcoin to fund a property purchase.

HSBC Bank, the U.K.’s sixth-largest mortgage lender with a 7.5% market share, according to Statista, did not respond to questions about its crypto policy by the time of publication.