The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookiesbefore using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
ESG

Mortgage defaults could rise if energy-efficiency policy tightens across European housing

With more than 220 million homes to renovate, banks must provide the necessary funding to avoid being left with non-compliant housing assets. But a lack of standardized data on energy performance certificates makes it difficult to justify lending to some homeowners.

hone-energy-rating-iStock-960.jpg
Photo: iStock

The latest results of the European Central Bank (ECB)’s climate stress tests incorporated the energy performance of buildings as a contributing metric to determine banks’ resilience to climate shocks. It revealed that European banks’ mortgage books could be exposed to a higher credit risk because of this.

“The test was a learning exercise,” a source at CaixaBank tells Euromoney. “It enabled us to look transversally across our different portfolios, including the mortgages book.”

The Madrid-headquartered bank has the largest mortgage portfolio in Spain. Its book mirrors the quality of the overall housing stock in the country.

Fitch-share-dwellings-chart-big.jpg

As legal frameworks across Europe adapt, it will become impossible to sell or rent properties with poor energy performance certificates (EPC) ratings.

In France, the recent Climate and Resilience Law requires properties to have at least a class F EPC by 2025, class E by 2028 and class D by 2034 to be rented out. Between 700,000 and 800,000 homes need to be renovated annually to adapt the national housing market, often referred to as a ‘passoire thermique’ or thermal sieve.

There


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree