It sort of makes sense that those homeowners that think ‘Green’ and how energy efficient their home is would be lower risk mortgage holders to lenders and less likely to fall into arrears than those customers who are maybe a little less thoughtful in this area - well now it is an unofficial fact, according to some BoE analysts. EPC is an energy efficient rating for a property and the analysis shows it is a leading credit risk indicator over the more well established metrics of LTV, number of bedrooms and price paid. There may be a deeper reason behind this data around education and awareness, and maybe those struggling financially trying to balance all priority bills, higher energy bills especially starting to increase at this time of year do not help.
BoE staff matched UK loan performance data to the year ending 2017 with energy performance certification data, and added borrower income at the time the mortgage was taken out in order to ensure that comparisons took place within the same income bracket. A simple comparison shows that 1.14 per cent of energy inefficient properties are in mortgage arrears versus 0.93 per cent of energy efficient properties. When factors such as the age of the property, number of rooms – heated and unheated – the floor area of the property, and aspects of the contract, such as the LTV and price are taken into account the results are barely changed.
https://www.mortgagestrategy.co.uk/greener-properties-less-likely-to-be-in-arrears-bank-underground/
unknownx500
