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Antony Antoniou – Luxury Property Expert

The Climate Change Mortgage Crunch

The Climate Change Mortgage Crunch


Climate change is making it harder for some homeowners to get a mortgage or sell their properties. As extreme weather increases flooding and subsidence risks, lenders are declining more mortgage applications out of concern that homes could become uninsurable or worthless. This “climate change credit crunch” stands to impact millions of properties across the UK.

More Mortgage Denials Due to Climate Risks

Mortgage brokers report that lenders are denying an increasing number of applications because homes are located in flood plains or areas at high risk of flooding. For example, HSBC implemented climate change policies in 2021 that limit lending for high-risk properties. Even just being in a medium-risk flood zone has led some banks like Halifax to reject mortgage applications.

With over 5 million homes in England considered at risk of flooding and 1 in 5 new builds improperly located, this issue threatens to block homeownership and sales for many.

Insurability and Affordability Challenges

Lenders require flood insurance policies for high-risk homes. But as extreme weather drives up subsidence and flooding claims, insurers are paying out billions and raising premiums. This leaves many homeowners struggling to find affordable coverage.

The government’s Flood Re scheme provides subsidized flood insurance for at-risk homes built before 2009. But properties constructed since then don’t qualify, and the program expires in 2039. Experts warn that could lead to a sharp decrease in available and affordable flood insurance.

What This Means for Homeowners

The climate change mortgage and insurance crunch presents challenges for both buyers and sellers of homes in flood-prone areas. It can be harder to find lenders willing to finance such high-risk properties. And shrinking demand from buyers rightfully concerned about flooding and insurability issues makes these homes tougher to sell.

Homeowners must understand these growing risks associated with riverside or coastal properties. There’s greater chance that extreme weather could cause damage leading to uninsurability and lack of financing options. While beautiful, such climate-vulnerable homes are becoming riskier investments by the year.

In Conclusion

– Climate change is increasing property risks, leading more lenders to deny mortgages and insurance for flood-prone homes

– Over 5 million UK properties face flooding risks that threaten financing, insurability, and resale value

– Extreme weather has driven up subsidence and claims, causing insurers to raise premiums beyond affordability for some

– Government programs like Flood Re offer subsidized coverage, but exclude newer builds and expire in 2039

– Homeowners must understand these growing climate risks when buying coastal or riverside properties

– More mortgage and insurance denials expected as extreme weather accelerates, impacting property values and sales

– Climate-vulnerable homes once seen as beautiful investments are becoming riskier and tougher to finance

The “climate change credit crunch” stands to block homeownership and sales for millions across high risk flood areas. Homeowners should prepare now for mounting challenges.

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