Energy performance ratings and borrower income and mortgage arrears of 1.8m properties were studied by Benjamin Guin and Perttu Korhonen from the central bank.
The data showed around 1.14% of energy-inefficient homes are in mortgage payment arrears, compared with 0.93% of energy-efficient properties.
Taking into account a number of variables, the findings concluded that the “energy efficiency of a property is a relevant predictor of mortgage risk”.
Insulated from economic cold snaps
A well-insulated home reduces energy bills, which can free up available income and help homeowners to make their mortgage payments even when budget shocks occur, Guin and Perttu wrote in on the Bank of England Underground website.
The pair added: “Overall, these results suggest that mortgages against energy-efficient properties are less frequently in arrears.”
Barclays is one lender that offers lower mortgage rates to borrowers buying energy efficient new build homes.
At the same time, a two-year energy efficient mortgage pilot backed by 37 European banks is currently underway, which aims to analyse the impact of energy efficiency on credit risk.