The Central Bank of Latvia has published a working paper on whether borrower-based measures can be adjusted to support housing-related energy-efficiency investments without weakening financial stability safeguards. The paper concludes that lower energy costs and higher property values from renovation work can allow borrowing limits to be eased while keeping loan risk metrics unchanged. It also examines recent easing measures in Slovakia, Hungary and Latvia using a bank survey. Those changes did not significantly affect banks’ credit portfolio risk profiles, but they also did not produce a significant increase in loans for energy-efficient investments. The paper therefore suggests combining adjustments to borrower-based measures with other policy measures to improve energy efficiency in real estate.
Central Bank of Latvia2026-06-08
Central Bank of Latvia working paper finds borrower-based easing for housing renovations preserved stability but did not materially increase energy-efficiency lending
The Central Bank of Latvia published a working paper assessing whether borrower-based measures can be adjusted to support housing-related energy-efficiency investments without weakening financial stability safeguards, concluding that lower energy costs and higher property values can justify easing borrowing limits while keeping loan risk metrics unchanged. Based on a bank survey of recent easing measures in Slovakia, Hungary and Latvia, the paper finds limited impact on credit portfolio risk and energy-efficiency lending, and recommends combining such adjustments with other policy measures to improve real estate energy efficiency.