Does Energy Efficiency Predict Mortgage Performance?
19 Pages Posted: 6 Feb 2020
Date Written: January 31, 2020
We examine a unique micro-level data set on residential mortgages in the United Kingdom. Our analyses suggest that mortgages against energy-efficient properties are less frequently in payment arrears than mortgages against energy-inefficient properties. This result is robust when controlling for other relevant determinants of mortgage default including borrower income and the loan to value ratio of the mortgage. We conclude that energy efficiency is a relevant predictor of mortgage defaults.
Keywords: credit risk, energy efficiency, green mortgages
JEL Classification: G21, Q40
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