ABSTRACT The energy use in residential buildings is one of the deciding factors in the transition to a carbon-neutral economy. Using data on Dutch residential mortgages from 2013 to 2022, we re-investigate the linkage between mortgage interest rates and the energy efficiency of buildings. The results are novel in that they are the first to empirically provide evidence in favour of a small sustainability discount of about 3 bps on mortgage interest rates for residential homes. Sensitivity checks suggest that younger-aged borrowers and those in the middle-income range benefit the most from a sustainability discount. From a policy perspective, our results are relevant as they show how banks ‘walk the talk’ and incorporate energy efficiency in mortgage terms.
Read full abstract