Green mortgages, 'meagre' discounts so far. Waiting to implement EU rules

Favourable conditions for the borrower and lower risks for the lending banks. The green mortgages - those intended for the purchase or renovation of buildings with a high energy performance, or for the improvement of at least two efficiency classes of an already owned home - represent with their double opportunity, for borrowers and for credit institutions, an important piece of a market that can have a strategic importance in contributing to the redevelopment of buildings.

Their rapid spread in recent years is the subject of a study by the Bank of Italy in one of the publications in the Questioni di Economia e Finanza series entitled "Is the Italian green mortgage market ready to take off?" and edited by Luigi Abate, Valeria Lionetti and Valentina Michelangeli. It analyses the development of the market and its prospects, but also dwells on its rates, leaving some question marks.

That green mortgages are a win-win solution is immediately made clear by BankItalia, when it emphasises how through these types borrowers can "benefit from favourable conditions and use their greater purchasing power to buy better quality real estate, as energy, repair and sanitation costs, as well as total monthly expenses, will be lower". At the same time, however, the lenders themselves "could benefit from a potential lower impact of transition risks on the mortgage collateral portfolio, which is also important for meeting supervisory expectations, expanding market share and improving green asset ratios".

On the size and future development of the market, the occasional paper first of all relies on the results of a survey conducted as part of the Regional Bank Lending Survey (Rbls) in the first half of 2023. This shows that 80% of the participating intermediaries (accounting for more than 80% of the entire Italian system in terms of total assets) granted loans for the purchase of residential property also based on the energy performance of the buildings given as collateral. Only 29 banks, representing about 54% of the total assets in the sample, provided the precise amount of green mortgages disbursed in 2022, which amounted to over 3.5 billion euro: about 12% of their total disbursements that year and 6% of the total new mortgages granted by the banks in the sample.

The lack of more precise indications in this regard would seem to be due not so much to a desire to conceal sensitive numbers capable of revealing market strategies to competitors, but rather to the fact that in the absence of an unambiguous definition of a green mortgage, one might have chosen not to provide data on the volume disbursed. What is important, again according to the survey, is that banks that are already issuing green mortgages or plan to do so in the coming years account for over 90% of the total business in the sample.