Energy Efficient Home Owners Less Likely to Default

A study released by University of North Carolina at Chapel Hill Center for Community Capital College of Arts & Sciences and the Institute for Market Transformation (IMT) shows that the risk of mortgage default is one-third lower for energy-efficient, Energy Star-rated homes.  This is great news for Fahe and its Members because this information reinforces our stance on the benefits of energy efficient homes for low-income homeowners.

There are two main points that should be taken away from this study:

  1. Owners of energy-efficient homes have a lower default rate because they save money on utility costs and put that money towards their mortgage payments.
  2. Energy efficient measures should be part of the appraisal and underwriting of a home.  This added value encourages homebuilders to construct energy efficient homes because they can sell them without a significant loss, thus increasing this type of housing stock and providing the savings for homeowners.

This ties in well with the energy summit Fahe hosted last year that focused on increasing awareness of energy efficient benefits with the appraisal and lending community.

This article on the IMT website goes more in depth on the study and provides links to the report.

For Fahe’s own findings on energy efficient construction and affordability, you can read our PDF report entitled A Bright Path Forward.