That’s a question being explored through the EeMAP Project, a European program being developed with banks to offer standardised green home loans with discounted interest rates for those buying or retrofitting homes.
EeMAP, or the energy-efficient mortgages action plan, aims to incentivise private capital investment into improving the energy efficiency of the housing stock in Europe to help the EU meet its Paris climate accord commitments.
According to the project’s website, “At the heart of the initiative is the assumption that energy efficiency has a risk mitigation effect for banks as a result of its impact on a borrower’s ability to service their loan and on the value of the property.”
A 2013 US study examined loan performance data to assess whether residential energy efficiency has an impact on loan default and prepayment risk. It found that default risks are on average 32% lower in energy-efficient homes, after controlling for other determinants.
No such study has been undertaken in Australia as yet, and we couldn’t find evidence that banks were taking this line here.
Nicole Hilton, business development officer from Maleny Credit Union, said all of their loans were assessed on the same criteria across industry. “So while it’s a benefit to the customer to have cheaper running costs and we encourage it, it’s not something that we see as reducing our financial risk,” she says.