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Going Green – The Growth in Green Mortgage Financing in Ireland

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Listed:
  • Lambert, Derek

    (Central Bank of Ireland)

  • Lyons, Paul

    (Central Bank of Ireland)

  • Carroll, James

    (Central Bank of Ireland)

Abstract

Green mortgages are a recent financial innovation, being established as a mainstream product in Ireland in 2019. By offering borrowers lower interest rates, green mortgages support wider emissions targets by incentivizing households and businesses to invest in energy efficiency. In this Note, we estimate the growth in green mortgage financing in Ireland and describe the characteristics of green mortgage borrowers and loans. We find that, despite their very recent introduction, green mortgages account for a sizable and growing share of mortgage lending, representing almost thirty per cent of originations in 2022. We also find that first time buyers (FTBs), those switching their mortgage, and borrowers in the Leinster region are the most likely cohorts to avail of green mortgages. Furthermore, green mortgage loan amounts are larger, are associated with higher value properties and are more prevalent in higher income groups, particularly for FTBs. This latter point suggests that there is a risk that the efficiency gap between high and low income groups could widen into the future. We also find evidence that some eligible borrowers have not availed of/received a green mortgage.

Suggested Citation

  • Lambert, Derek & Lyons, Paul & Carroll, James, 2023. "Going Green – The Growth in Green Mortgage Financing in Ireland," Financial Stability Notes 4/FS/23, Central Bank of Ireland.
    • Handle: RePEc:cbi:fsnote:4/fs/23
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    File URL: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/going-green-the-growth-in-green-mortgage-financing-in-ireland.pdf?sfvrsn=d7659e1d_5
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    References listed on IDEAS

    as
    1. Hyland, Marie & Lyons, Ronan C. & Lyons, Seán, 2013. "The value of domestic building energy efficiency — evidence from Ireland," Energy Economics, Elsevier, vol. 40(C), pages 943-952.
    2. Adhikari, Tamanna & Carroll, James & Lambert, Derek, 2023. "An Estimate of Climate-Related Transition Risk in Irish Mortgage Lending," Financial Stability Notes 1/FS/23, Central Bank of Ireland.
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