An energy efficient mortgage (EEM) (or "green mortgage")[1] is a loan product that allows borrowers to reduce their utility bill costs by allowing them to finance the cost of improving the energy-efficiency of the real estate property, at the point of the house purchase or the refinancing of existing housing.
To date, the popularity of the product has been somewhat limited: The New York Times estimates less than 1% of all U.S. home loans are EEMs.
[3] In the European Union, the Energy Efficient Mortgage Initiative has developed an industry-led label, which is currently being used by 37 banks.
[4][5][6] its definition requires loans to enable an energy efficiency improvement of at least 30%, which is aligned with the EU Taxonomy of sustainable activities.
[8] Several studies have found evidence of a correlation between energy efficiency and credit risk, meaning that borrowers of a green mortgages are less likely to fall into insolvency.