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Mortgage default rates about one-third less in energy-efficient homes

Borrowers are less likely to default on their mortgages if they live in an energy-efficient home.

January 15, 2015

Default risks are on average 32% lower in energy-efficient homes, controlling for other loan determinants, according to a study by the University of North Carolina -- Center for Community Capital. Many have speculated that energy-efficient homes should have lower default risks than standard homes because the lower energy costs would free up more money to make mortgage payments. A borrower in an ENERGY STAR residence is also one-quarter less likely to prepay the mortgage, the study found.

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