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illuminem summarizes for you the essential news of the day. Read the full piece on WIRED or enjoy below:
🗞️ Driving the news: Extreme weather is significantly impacting property values, prompting banks to rethink mortgage approvals and climate financing
• A study shows US mortgage approvals drop nearly 1% and values over 6.5% for every 1°C temperature rise above average
• This reflects growing concern among lenders about climate-related risks to property assets
🔭 The context: Financial institutions are recognizing that climate change poses a direct threat to real estate investments, with events like wildfires, hurricanes, and flooding influencing lending and insurance practices
• Properties in high-risk areas, particularly coastal regions, are becoming less desirable for loans and insurance due to escalating climate impacts
• Despite awareness, banks have been slow in providing financial products to help homeowners adapt to these changes
🌍 Why it matters for the planet: As the housing market is a major store of global wealth, the financial instability caused by climate change could have widespread economic repercussions
• The reluctance of lenders to finance properties in high-risk areas underscores the urgent need for effective climate mitigation and adaptation strategies to protect communities and assets
⏭️ What's next: Banks are expected to develop more financial products to support climate resilience, including green mortgages and loans for energy-efficient retrofits
• Increased collaboration between policymakers and financial institutions will be necessary to address these challenges
• Homeowners may also see greater emphasis on property energy efficiency to secure favorable lending terms
💬 One quote: "There’s a gravitational pull on the value of those properties,” says Dave Burt, founder and CEO of DeltaTerra Capital
📈 One stat: For every 1°C increase above average temperatures, mortgage approvals fell by nearly 1%, and their value dropped by over 6.5%
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