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The greening of lending : mortgage pricing of energy transition risk
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Bell, Jennifer, Battisti, Giuliana and Guin, Benjamin (2023) The greening of lending : mortgage pricing of energy transition risk. Working Paper. London: Bank of England. Bank Of England Staff Working Paper (1,016).
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Official URL: https://www.bankofengland.co.uk/working-paper/2023...
Abstract
Shocks to energy prices can have a direct impact on homeowners’ disposable income, affecting their ability to pay their mortgage. Properties’ energy efficiency can provide some protection against the transition risk of rising energy costs. Anecdotally, lenders appear to
be increasingly differentiating mortgage interest rates based on energy efficiency. But did lenders account for it before relevant regulatory interventions came in? We estimate standard mortgage pricing models using a unique data set of 1.8 million mortgages originated in the United Kingdom pre-2018. We find no evidence of lenders charging higher rates on riskier mortgages against energy-inefficient properties. Overall, our findings do not provide conclusive evidence that lenders took energy efficiency into account when setting interest rates prior to regulatory interventions.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management H Social Sciences > HG Finance |
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Divisions: | Faculty of Social Sciences > Warwick Business School | ||||
Library of Congress Subject Headings (LCSH): | Mortgage loans , Mortgage loan servicing , Energy consumption , Dwellings -- Energy consumption, Climatic changes, Climatic changes -- Economic aspects | ||||
Series Name: | Bank Of England Staff Working Paper | ||||
Publisher: | Bank of England | ||||
Place of Publication: | London | ||||
ISSN: | 1749-9135 | ||||
Official Date: | 3 March 2023 | ||||
Dates: |
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Number: | 1,016 | ||||
Number of Pages: | 25 | ||||
Institution: | University of Warwick | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Free Access (unspecified licence, 'bronze OA') | ||||
Copyright Holders: | ©2023 Bank of England | ||||
Date of first compliant deposit: | 19 April 2023 | ||||
Date of first compliant Open Access: | 21 April 2023 | ||||
Related URLs: | |||||
Open Access Version: |
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