Today’s low home mortgage interest rates are great, either for refinancing or buying a house. Concurrently, the home mortgage industry is paying attention to our changing climate trends, particularly along coastal areas, flood plains and regions prone to wildland fire.
In addition, home buyers are increasingly seeking mortgages that make it easier for them to stop making payments and walk away from loans if their house becomes unsellable, or default regardless of loan type. Lenders are responding by requiring higher down payments, reducing payback periods, or departing home loan markets entirely in higher risk areas.
Recent research, reported in the journal Climatic Change, shows that banks are reselling more of their flood or fire risk zone loans to government backed organizations such as Fannie Mae and Freddie Mac, shifting financial risk to taxpayers.
The private home insurance industry is also paying attention to the effects of climate change. The increasing frequency and magnitude of catastrophic climatic events, including hurricanes, floods, fire and supercell events, has caused insurers to recalculate (significantly increase) premiums or abandon certain markets. Even when properties are insured, flood insurance does not protect against risk of reduced value or unsellable houses.
So what to conclude from these circumstances? Certainly this illustrates that climate change is not some future event. It is directly and indirectly affecting our lives now in many ways, typically not for the better. The prime question is when/what are we going to do about it?