The energy crisis is pushing Belgians to invest in eco-renovation of their homes.
Faced with energy bills that have skyrocketed for many months, Belgians have not waited to invest in the energy conversion of their homes. Actually four largest financial institutions in the country all show a three-digit growth in the number of green/energy loans granted in 2022. BNP Paribas Fortis, the leader in mortgages in Belgium, recorded a 123% increase in “Energy” installment loans between 2021 and 2022. At KBC, the growth of these loans is 159% in one year and 275% since 2018 at ING. Belfius, for its part, talks about an annual increase of 102%. Overall, Febelfin, which takes the figures from all Belgian financial institutions, notes a 77.3% increase in energy efficient loans during the first three quarters of 2022.
This jump is due to several factors. “That energy crisis and its impact on the energy bill means that ecological renovation is now recognized as necessary and urgent by the majority of owners”, admits ING. In addition, these interest-free loans, unlike mortgages, allow borrowing smaller amount to finance a project, by proceeding in stages in its renovation without incurring administration fees or notary fees. “Access to these credits is therefore faster, making it possible to improve energy performance and reduce bills more quickly”, explains BNPPF spokesperson Valéry Halloy.
Higher borrowed amounts
The Belgian usually does that too borrow more to finance the energy conversion of his home. The amount of these energy loans grew as well 143% on BNPPF in 2022. Belfius observes the same trend, but with some differences between the three regions. “In 2022, the Walloons borrowed an average of 13,613 euros for a green loan, compared to 15,936 euros in Flanders and 17,825 euros in Brussels,” said Ulrike Pommée, spokesperson for the bank.
The proportion of renovation loans in the bank has increased significantly since 2016. “This year there are, among other things, six out of ten renovation loans are ‘green’ loans, whereas in 2016 the ratio was only one in ten. The Belgians have clearly understood the interest in this type of loan to make their homes greener and save on energy bills”, explains Ulrike Pommée.
Insulation, solar cell, heat pump…
“Access to these credits is therefore faster, making it possible to improve energy performance and reduce bills more quickly.”
“More than one in two loans granted relate to solar energy savings (solar panels/solar cell). Then 12% of these loans relate to frames / double glazing, 12% are intended for insulation and 12% for heating. and/or the boiler.”, explains BNP Paribas Continue.
At Belfius, these loans are mainly used to finance “insulation work, installation of a heat pumpof one solar water heater, a highly efficient boiler, solar panels or triple glazing”, quotes the bank, which reminds that the rates offered for these loans are more advantageous than for conventional renovation loans. Of course, but they are not spared by the recent decisions of The European Central Bank (ECB), which has repeatedly raised its key interest rates. In 2021, “green renovation” and “energy” loans with Belfius and BNP Paribas Fortis had interest rates of 1.30% and 1.25% respectively. Today, the two banks offer a rate of 3.25%. “In relation to inflation and energy costs, the increase in rates remains at an acceptable level and the investment makes it possible to lower the energy bill, therefore the fact that the impact of the rate increase is not felt on the number of loan applications and the level of the amounts collected”, analyzes Valéry Halloy from BNPPF.
Energy/green loans have one shorter duration and a more limited amount than mortgage loans (conditions vary from bank to bank), at fixed prices that cannot be negotiated, but without administration or notary fees. At Belfius, for example, at least 50% of the loan amount must be used to save energy. A person who borrows 10,000 euros over 30 months at 3.25% (APR) to finance the installation of solar panels, for example, will repay almost 350 euros per month.
Sustained demand in 2023
Financial institutions expect that the demand for green credits will not weaken in 2023. “The upward trend should be confirmed with the obligation, from January in Flanders, for those who buy a property with a PEB E or F, to renovate, but also with the trend towards greener housing combined with the energy crisis”, BNPPF predicts.
- Despite the increase in rates, green installment loans are still more popular in Belgium.
- This can be explained in particular by the energy crisis, which forces Belgians to invest in eco-renovation of their homes.
- In addition to the increasing demand, the amount borrowed is also increasing.