Mortgage Loans ukUnited Kingdom Mortgage Loans
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Could they work for the UK and what are they?
Governments hope to use greens in mortgage loans to create incentives for citizens to make their houses more energy-efficient. Similarly, a bank may be willing to provide more advantageous conditions, such as lower interest charges, to homeowners of energy-efficient houses if they are less likely to be in arrears with their mortgage payment. It calls for more research on eco-mortgage issues as a part of an overall policy to promote greater levels of economic use.
Which are " verdant loans "? There is no universally accepted concept of sustainable mortgage at the present time, but they usually relate to mortgage on energy-efficient home. Expanding this to cover the areas of climatic resistance and energetic performance could be useful. We' ll be discussing this more in the second part of this two-part episode on verdant mortgage lending.
Grounds for encouraging the use of greenhouse gases in mortgage lending are that property holders of energy-efficient houses are less likely to fall behind with their mortgage repayments. Given that increasing power consumption reduces the amount of electricity consumed, energy-efficient households should have lower billings. As a result, house holders may be less likely to fall behind with their mortgage due to their higher available incomes.
An interesting US survey by the non-profit Institute for Market Transformation is often quoted, among others on page 43 of the government's call for proof of the establishment of an electricityefficiency market (PDF). IMT research finds that homeowners of energy-efficient houses are 32% less likely to fail with their mortgage payment.
As an example, higher-income householders buy both energy-efficient houses more frequently and mortgage repayments less frequently in general. In addition to the restrictions on available information, it is hard to conclude from the IMT survey for the UK mortgage markets. Whereas the US dataset comprised only owner-occupied houses, the UK has a boom in the buy-to-lease sector.
Renters do not directly profit from lower ernergy costs through ernergy saving methods - they do. For example, the relationship between lower invoices and lower mortgage losses for lessors and buy-to-lease mortgage debtors is less clear. IMT is an interesting start to research on mortgage greening. But we need to duplicate the results in the UK before we assume that energy-efficient homes are less likely to fail with their mortgage loans.
Greens: Is a mortgage either red or not? Marking a mortgage either red or blue is not the only options. As an example, a bank could consider band widths for power efficiencies as part of its calculation of affordable costs. That could lead to an increase in buyer demands for energy-efficient real estate. It could be a more secure and agile choice than providing lower interest rate options for mortgage loans.
In addition to the use of mortgage based items, the UK Government should also consider other ways to promote the use of efficient mortgages. Government demands for proof of the Green Deal and the creation of a power efficient markets are a good indication that they want to draw lessons from the past, and the government's Clean Growth Strategy should succeed.
These comments are the first in a two-part documentary devoted to the subject of mortgage loans.