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

Pierre Monnin, à dám Banai, KristÄ«na BojÄ re, Ján Klacso (), Reiner Martin () and János Szakács
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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

No WP 3/2026, Working and Discussion Papers from Research Department, National Bank of Slovakia

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.

JEL-codes: C8 E44 E50 G21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026-03
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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1137

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