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Report

Creating an energy efficient mortgage for Europe. Towards a new market standard

18 Sep 2018
Description

Greening our buildings is at the heart of our ght against climate change. Greener, more energy efficient buildings can also help to reduce the exposure to risk for property owners and the banks that nance them. Energy efficient mortgages can therefore be a powerful tool to incentivise investment in greener buildings. The new market standards set out in this report pave the way for banks to act now to mainstream the energy efficient mortgage market, not only de-risking their mortgage portfolios but also playing a key role in securing the future of the planet.

The benefits of improving Europe’s building stock stretch far beyond meeting climate goals; increased comfort and wellbeing, lower energy bills and more investment for local economies are just a few examples. Yet the risks of not taking action are equally stark and long term: rising operating costs, the devaluation of inefficient buildings in an increasingly carbon-conscious society and non-compliance with ever more stringent legislation threaten banks and borrowers.

With 97% of Europe’s buildings currently deemed inefficient, these risks are almost universal, affecting every mortgage portfolio. Given the current poor state of the European building stock, it is estimated that the rate of energy efficient renovation must treble – from 1% to 3% - if Europe is to meet its climate and energy goals.

Mortgages account for around €7 trillion, or a third of the European banking sector’s assets, and are the best-known form of property finance for consumers. This makes energy efficient mortgages a powerful economic incentive to tackle the risks from poor performing buildings. This report marks a first for the sector; setting out a new market standard and a clear pathway for banks to follow to begin addressing the problem of poor performing buildings in their mortgage portfolios. In doing so they will help to create a more sustainable property sector for future generations.

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2018
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