Yet another reason to encourage energy efficiency?

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By: SGN Staff

At first glance it may seem strange to say that owners of energy-efficient, Energy Star certified homes are less likely to default on their mortgage, but that's the primary finding of a recent study. For those owners, the risk of mortgage default is one-third lower. Why? The answer is not quite this simple, but the energy savings of an efficient home can make it easier to consistently stay on top of mortgage payments.

 

The report, Home Energy Efficiency and Mortgage Risks, was conducted by the Chapel Hill Center for Community Capital at the University of North Carolina and the energy conservation advocacy group Institute for Market Transformation (IMT). It is said to be the first academic study to examine the link between energy efficiency and repaying a mortgage, according to a Bloomberg BNA news article.

 

"It stands to reason that energy-efficient homes should have a lower default rate, because the owners of these homes save money on their utility bills, and they can put that money toward their mortgage payments," Cliff Majersik, IMT executive director, was quoted as saying. "We long believed this to be the case, and now this study proves it. Successful housing market reforms will require reconsidering the risk factors in mortgage default, including energy costs."

 

Robert Sahadi, director of energy efficiency finance policy for IMT, confirmed that energy savings are sufficient to help homeowners maintain their mortgage payments, particularly for a medium-income mortgage holder.