Green mortgages: sustainability and digitization
ODF – Funcas 27
Date: April 6, 2021
The growing social awareness to promote sustainability, energy efficiency and environmental protection is encouraging the growth of a new type of credit, ecological financing. Mainly, through green mortgages.
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With a green mortgage, a bank or mortgage lender offers a home buyer preferential terms if they can demonstrate that the property they are applying for meets certain environmental standards. Unlike traditional contracts, the object of a green mortgage has to be specifically green real estate. In any case, not only is the acquisition of a home with a high initial energy certification financed, but it is also possible to access this type of loan to rehabilitate or reform a property that improves its energy efficiency by 30%. For bank customers, the attractiveness of green mortgages is in their price, since they are granted at lower rates than those prevailing in the market.
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The growing demand for this type of financing and the commitment of the banking sector to protect the environment has caused the supply of this green credit to grow.
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Some market studies[1] point out that at the end of 2019 half of the 50 largest banks in the world offered this financial product.
The Spanish banking sector is no exception. Currently there are already numerous entities that offer this type of mortgages. And, in many cases, it is done digitally. Most of the entities that offer this type of mortgages, in fact, prioritize that they be made from the digital channel.
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In the last six years, the global volume of green loans (including financing for real estate developments) has reached 40 billion dollars[2]. The expectation is that it continues to grow. According to data from the European Mortgage Federation, it is estimated that in the EU there are more than 220 million blocks of buildings built before 2001 and millions of houses with a poor energy rating. The rehabilitation of this park of buildings to adapt it to the new environmental regulations can make this type of green financing grow even more.
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