Your home s energy performance is already affecting your mortgage––soon climate risk will too

Billy Odell Tucker-Robinson Founder & Host — Banking With Billy Network • Intelligence Network • Data Science • AI Research • World News
Published: 2026-09-30T19:21:59.760Z • Permanent link

Regulatory bodies across the globe are set to tighten their lending standards, with a particular focus on the energy performance of homes. In the United States, the Department of Housing and Urban Development (HUD) has announced new guidelines that will require lenders to consider the energy efficiency of properties when evaluating mortgage applications. This move is part of a broader effort to address climate change, which is increasingly being recognized as a major risk factor in the lending process.

Markets in Europe are also taking steps to address energy efficiency, with the European Union's (EU) Energy Performance Certificate (EPC) scheme set to become more stringent. The EPC scheme requires homeowners to have their properties rated on a scale of 1-10, with 10 being the most energy-efficient. Lenders will use these ratings to inform their lending decisions, and those properties with lower ratings may face higher interest rates or stricter terms.

The impact of these changes will be felt across the mortgage industry, with lenders and borrowers alike needing to adapt to the new requirements. According to a report by the American Housing Survey, the average energy efficiency rating of homes in the United States is just 6.5 out of 10, indicating a significant gap between current standards and the new requirements. This will require lenders to rethink their underwriting processes and borrowers to prioritize energy efficiency when purchasing a home.

The energy performance of homes is already having a significant impact on the mortgage industry, with lenders and borrowers facing new challenges and opportunities. For companies like Quicken Loans, which has been at the forefront of the energy efficiency movement, this is a major opportunity to differentiate themselves from competitors. Quicken Loans has launched a range of energy-efficient mortgage products, including a new loan program that offers lower interest rates for borrowers who invest in energy-efficient upgrades.

The energy efficiency movement is also gaining traction among research communities, with a growing body of evidence highlighting the benefits of energy-efficient homes. According to a report by the National Renewable Energy Laboratory, energy-efficient homes can reduce energy consumption by up to 30%, leading to significant cost savings for homeowners. This research is being used by policymakers to inform their decisions, with many calling for increased investment in energy-efficient housing programs.

The focus on energy efficiency in the mortgage industry is part of a larger trend towards greater transparency and accountability in the lending process. Regulatory bodies are increasingly recognizing the need for lenders to be more transparent about their lending practices, and to provide borrowers with more detailed information about the terms and conditions of their loans. This trend is being driven by a range of factors, including the rise of fintech and the increasing importance of data analytics in the lending process.