You are here: Home - News -

UK Finance ‘not convinced’ of link between green homes and mortgage risk

  • 25/10/2018
  • 0
UK Finance ‘not convinced’ of link between green homes and mortgage risk
The link between energy efficiency homes and a lowered mortgage credit risk is not as simple as has been suggested, according to Carla Sateriale manager, mortgage UK Finance’s mortgage department.  


Bank of England staff recently found borrowers in greener homes were a lower credit risk, largely because households spend less on bills and therefore have a higher buffer against financial shocks.

It is a theory that has been suggested by a number of groups and is also being trialled by a group of European banks as part of a two-year pilot.

But in an online blog post, Sateriale said: “We are not fully convinced that the link is as simple as this.”

She added: “Despite several studies having established a correlation between energy efficient mortgages and performance of the asset, it is not fully clear whether this has anything inherent to do with energy efficiency, or if other unobserved factors are at play.

“For example, it is possible that consumers that purchase eco-friendly properties may be more conscientious than the average consumer, which may motivate both their preferences for green products and their financial behaviours.”

Another explanation could be that more new-build energy efficient homes are built in the South East where arrears rates are typically low because of the strength of the local economy, Sateriale said.

She suggested it will take several years of data to provide a more robust link between mortgages and energy efficiency homes.

There are 0 Comment(s)

You may also be interested in

Read previous post:
Compare the Market launches mortgage eligibility tool has launched a mortgage tool that indicates how much users may be able to borrow and which lenders may...