Homebuyers across the EU could be offered better borrowing rates on mortgages in return for purchasing more energy efficient homes or committing to implement energy saving work within properties, under a ground-breaking project to define a European energy efficient mortgage product, pioneered by a unique partnership of banks, property valuers, energy efficiency businesses and utility providers.

The Energy Efficiency Mortgage Action Plan (EeMAP) initiative will explore the link between energy efficiency and borrower’s reduced probability of default and the increase in value of energy efficient properties. For banks and investors, this could lead to loans which represent a lower risk on the balance sheet and could therefore qualify for a better capital treatment. It could also ensure that banks are able to recognise “energy efficient” assets in their risk profiling, which would begin to help the market to price-in the added value of energy efficient real estate.

The initiative has been launched by a consortium led by the European Mortgage Federation – European Covered Bond Council (EMF-ECBC). The project partners are the Ca’Foscari University of Venice, RICS, European Regional Network of Green Building Councils, E.ON, and SAFE Goethe University Frankfurt. The project was covered in Bloomberg upon launch.

In October 2017, WorldGBC's Europe Regional Network published its first report through the EeMAP initiative. Titled Creating an Energy Efficient Mortgage for Europe - A Review of Building Performance Indicators that Impact Mortgage Credit Risk, the report examines how energy efficient mortgages could work in terms of the underlying building performance assessment, and how they can support mortgage lenders and borrowers. Download the report.

In June 2018, 37 major European banks launched a new energy efficiency mortgage pilot scheme. Some of Europe’s largest banks are participating in the pilot, including BNP Paribas, ING Bank, Nordea Bank and Société Générale. The banks and financial institutions involved in the scheme represent a combined lending power of over €3 trillion, equal to around 20% of the EU’s GDP.

In September 2018, WorldGBC's Europe Regional Network published a second report through the EeMAP initiative: Creating an Energy Efficient Mortgage for Europe: Towards a New Market Standard, tackles how Europe should finance the building of an energy efficiency revolution needed to slash the 40% of Europe’s carbon emissions that come from its buildings – a staggering 97% of which are inefficient. Estimates show that Europe will miss its climate targets unless it renovates at least 23,000 homes every day until 2050.

Download the report.

To read accompanying reports by EeMAP on Green Finance, Green Value, and the Impact of Energy Efficiency on Probability of Default, click here.