Does energy efficiency predict mortgage performance?

Staff working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 31 January 2020

Staff Working Paper No. 852

By Benjamin Guin and Perttu Korhonen

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.

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