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Upgrading housing: the potential and limits of borrower-based measures

Author

Listed:
  • Pierre Monnin

    (Council on Economic Policies and Centre for Economic Transition Expertise)

  • à dám Banai

    (Magyar Nemzeti Bank)

  • KristÄ«na BojÄ re

    (Latvijas Banka)

  • Ján Klacso

    (National Bank of Slovakia)

  • Reiner Martin

    (National Bank of Slovakia)

  • János Szakács

    (Magyar Nemzeti Bank)

Abstract

In this paper, we explore how borrower-based measures (BBMs) can be adjusted to provide additional funding for housing-related energy-efficiency investments without compromising financial stability objectives. We first show that lower energy costs and higher house price values resulting from renovation work allows an easing of borrowing limits while keeping loan risk metrics unchanged. We then focus on three recent easing measures implemented in Slovakia, Hungary, and Latvia and assess their effectiveness using a bank survey. We find that these policy changes did not significantly affect banks’ credit portfolio risk profile and thus financial stability. At the same time, they did not generate a significant increase in loans for energy-efficient investments. We thus suggest combining BBM adjustments with other policy measures to improve energy-efficiency in real estate.

Suggested Citation

  • Pierre Monnin & à dám Banai & KristÄ«na BojÄ re & Ján Klacso & Reiner Martin & János Szakács, 2026. "Upgrading housing: the potential and limits of borrower-based measures," Working and Discussion Papers WP 3/2026, Research Department, National Bank of Slovakia.
    • Handle: RePEc:svk:wpaper:1137
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    References listed on IDEAS

    as
    1. Jennifer Bell & Giuliana Battisti & Benjamin Guin, 2023. "The greening of lending: mortgage pricing of energy transition risk," Bank of England working papers 1016, Bank of England.
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    More about this item

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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