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

Pierre Monnin, Adam Banai, Kristina Bojare, Jan Klacso, Reiner Martin and Janos Szakacs
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Pierre Monnin: aCouncil on Economic Policies and Centre for Economic Transition Expertise (London School of Economic and Political Science)
Adam Banai: Magyar Nemzeti Bank
Kristina Bojare: Latvijas Banka
Jan Klacso: Narodna banka Slovenska
Reiner Martin: Narodna banka Slovenska
Janos Szakacs: Magyar Nemzeti Bank

No 2026/03, Working Papers from Latvijas Banka

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.

Keywords: housing renovation; borrower-based measures; green loans (search for similar items in EconPapers)
JEL-codes: C8 E44 E50 G21 (search for similar items in EconPapers)
Date: 2026-06-08
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Persistent link: https://EconPapers.repec.org/RePEc:ltv:wpaper:202603

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