What are green mortgages? – The Real Estate Journal

Lhe potential for sustainable energy renovation of residential buildings in Switzerland is significant. More than a million Swiss properties are in urgent need of renovation. Around 60% of them are over 20 years old and a large proportion still rely on fossil fuels for heating. Modernization of energy systems is now strongly encouraged by the State, leading to a real boom in recent months. Many banks, some pension funds as well as investment foundations have introduced special financing offers for energy-efficient buildings: green mortgages. Suppliers grant reductions on the rate if the housing to be financed meets the standards of Minergie certificates or specific CECB classes (cantonal energy certificate for buildings). The supply is still relatively limited, but constantly increasing.

The benefits of green mortgages for borrowers

The fact that green mortgages are well received by borrowers can be explained by attractive interest rates – but not only that. The energetic renovation of the property, even if it requires a certain investment, makes it possible to considerably reduce incidental costs and benefit from advantageous financing. In the case of energetically attractive residential properties, mortgage borrowers additionally benefit from increased resale possibilities.

Towards a simplification of the criteria for granting a green mortgage

Certifications like Minergie or CECB are expensive, especially for existing real estate. They can amount to around 1500 Swiss francs for a detached house. This is why MoneyPark aims to make green mortgages more easily accessible. In view of the energy savings achieved using more sustainable systems, measures such as renovating the building envelope or replacing oil heating with a heat pump should also qualify for reductions. mortgages. This approach also limits the charges assumed by mortgage borrowers.

A limited supply, but increasing

There are no precise figures on the volume of green mortgages granted to date in Switzerland. Their share would represent less than 10%. Our portfolio consists of banks, pension funds and investment foundations, around twenty of which offer green mortgages. A sharp increase in demand is expected over the coming months. It will be possible to meet this demand only if the products are accessible with uniform, simple and clear criteria, and if their price does not exceed that of the most attractive so-called conventional offers. We recommend that mortgage borrowers looking for a green mortgage compare different providers and find out about possible mortgage discounts for an energy efficient property. These reductions are often on the order of a quarter or half a percentage point and generally limited to a certain number of years.

Green mortgages, a limited lifespan?

With the reduction in pollutants emitted by new constructions compared to existing buildings as well as the tightening of requirements in this area, green mortgages will probably be available during a transitional period of only around ten years. If we want to achieve the climate objectives set, the standards of the Swiss building stock must evolve quickly.