A number of banks across Europe could soon be offering cheaper interest rates to people buying energy efficient homes or committing to implement energy saving measures.
The European Energy Efficiency Mortgage initiative has been launched by a consortium led by the European Mortgage Federation – European Covered Bond Council (EMF-ECBC).
It aims to create a standardised “energy efficient mortgage” based on preferential interest rates for energy efficient homes and additional funds for retrofitting homes at the time of purchase.
According to the EMF-ECBC, a US study on 70,000 mortgages show default risks drop by 32% among energy efficient homes.
The project represents the first time a group of major bands and mortgage lenders, including HSBC Holdings and BNP Paribas, as well as businesses from the building and energy industries have come together to address the concept of energy efficient mortgage.
In the EU, buildings are responsible for 40% of total energy usage and 36% of CO2 emissions.
By improving the energy efficiency of buildings alone, the EU’s total use is estimated to be reduced by 5%-6% and CO2 emissions by 5%.
Luca Bertalot, EMF-ECBC Secretary General said: “We have the responsibility to design a sustainable environment for future generations by developing a pan-European mortgage financing mechanism according to which energy efficiency investments are made more accessible and affordable for consumers and institutional investors and the subsequent energy efficiency improvements reduce risk for banks, creating a win-win for all involved.”