Energy Class Is Not Decisive for Residential Mortgages

The European Central Bank's increasingly strict rules regarding energy efficiency have raised questions about whether loan issuance will depend on buildings' energy ratings. Anne Pärgma, head of Swedbank's residential lending department, explains that when it comes to personal residential loans, the answer is no. It's true that an energy rating can affect the loan price, but it is only one aspect among many other important ones.

Looking at last year's statistics, half of Swedbank's residential loans have been issued for the purchase of homes that were built or thoroughly renovated before 2000. This means that if an energy rating were a determining factor in the decision to issue a home loan, at least half of the loans would not be issued and homes would not be purchased. The presence of an energy rating may be a sales argument in real estate purchases, but from a lending market perspective, it is not yet possible to rely solely on its existence. We still choose real estate suitable for us for purchase, and the bank finances that purchase by setting loan terms.

Yes, an energy rating is important and affects to a certain extent the borrower's own financing contribution and loan price, and we're talking here about a difference of 0.1 to 0.5 percentage points. For personal loans, important aspects still include the borrower's income, the balance between expenses and income, previous credit behavior, and other such borrower-related conditions. As a bank, we also take into account the fact that people want to purchase a home that does not yet have an energy rating, but which is planned to be renovated to be more energy efficient and then the rating will be requested. In such cases, we are interested in whether the necessary funds for renovation are available, and if necessary, we provide advice.

Pärgma explains that the bank naturally monitors what energy ratings the assets in its portfolio have, but the availability of such data is a separate question. An energy rating that is issued based on consumption is valid for ten years. If it is a new, recently completed asset that has been assigned an energy rating based on calculations, then the rating is valid for two years from the issuance of the certificate of use. Therefore, it must be understood that an energy rating is not valid indefinitely. In recent years, the topic of energy efficiency has clearly become more current and attention is being paid to it both when purchasing real estate and when issuing loans. We can confirm that people's awareness regarding energy savings has grown, and this is actually the most important development. Awareness of the need for apartment building renovations has particularly increased.

Although the state offers various support measures for apartment building renovations, funds are not sufficient for everyone at once. In such cases, however, there is no need to despair, as banks also offer various options here. For example, it is possible to start renovating an apartment building in stages, starting with, for example, the roof, then moving on to the facade, and so on, all of which is for the apartment association to decide. However, the important thing is to start with all of this as early as possible, because administrative procedures (projects, permits, etc.) take time.