Partnering with banks to offer EU taxonomy-aligned green mortgages and renovation loans
Educating Europe’s citizens on the value of borrowing responsibly to buy high quality green homes and improving the mortgage risk underwriting process to incorporate the more advantageous ongoing cost profile from net Zero Energy Buildings (nZEB) is a major objective of the SMARTER project.
SMARTER support banks by...
Demonstrating financial risk reduction
Saving 100 Euros each month on energy costs contributes exactly the same to a homebuyer’s ability to pay a mortgage payment as earning, after tax, 100 additional Euros per month. Research, presented in the “Green Mortgages and Green Loans: a Toolkit for Financial Institutions” created by the SMARTER project shows a 32% reduction in mortgage defaults for EE/Green Homes and even further financial risk improvement as the level of EE/Green achievement improves.
Providing comprehensive documentation
Including procedures, sample legal agreements, and relevant research along with the support of the SMARTER4EU Help Desk to help a partner bank launch a credible and successful Green Homes & Green Mortgage program.
Improving deal flow quality
Investors and developers choosing to build Green Homes represent the upper tier of professional builders in a market. A Green Homes & Green Mortgage (GHGM) programme actually engages a non-profit organization to go out and bring in quality projects to a partner bank.
Engaging national banks
A SMARTER partner’s GHGM programme has already received guidance from the country’s National Bank that modelled energy savings, using a credible methodology, can be included in buyer’s mortgage applications as “additional income”. This sends a powerful signal to banks that GHGM programs are both acceptable within existing legislation and recognize “a penny saved is a penny earned”.
Differentiation, environmental responsibility and governance
While this could be said for all companies involved in GHGM programmes, loan products provided by banks can positively or negatively affect how the construction industry impacts the local and global environment. Both in substance and in image, the bank can improve its own and others’ environmental stewardship while increasing profitability for the reasons stated above.
Promoting green finance as the 'hero' of a green economy and citizens' well being
Citizens can be very reluctant to take out a loan and, in particular (and understandably), worry about losing their house. Limiting one’s borrowing is typically a good practice. When, however, the avoidance of a loan leads to sub-optimal building decisions and results in acquiring, building or renovating a home with high operating costs, negative health impacts, frequent need for repairs, and lower retained asset value over time it is good for neither the bank or the borrower. SMARTER delivers a strong message that “borrowing responsibly to buy a Green Home will provide many years of comfort and health for your family, cost savings for your pocket, and protection for our planet and local nature.”
What is your role?
SMARTER4EU and SMARTER FINANCE FOR FAMILIES takes a systemic, multidisciplinary approach to solving a systemic problem. The needs and motivations of all of the essential stakeholder groups that are critical to moving the green finance topic forward to promote greener homes for Europe’s are considered.
