Hometrack has announced a partnership with Ambiental and Terrafirma, two UK climatology specialists, to deliver a climate change risk solution for mortgage lenders.
Hometrack’s Climate Change Risk Assessment product will bring together critical risk components into a single lender-focused product, powered by a combination of climatology expertise from Ambiental and Terrafirma, alongside Hometrack’s valuation and property insight.
The product will identify the physical and transitional risk to property, both today and using future scenario modelling. This will be aligned to the BoE climate strategy by building awareness of climate related risks and identifying where they exist within a property portfolio, while increasing understanding of the impact and opportunities for lenders.
It will also assess and manage risk by translating what climate change means for lenders, such as defining the financial impact of climate change risk on a property’s value, as well as supporting strategic decision making and helping to shape risk policy.
Hometrack says the product will also inform investment decisions through integrating climate change risk into automated business operations, such as at mortgage originations.
The Climate Change Risk Assessment will be delivered through existing and integrated platforms, at origination and through portfolio assessment, enabling risk identification and decision management for lenders.
The product will also model the impact of climate change on property values with the use of Hometrack’s AVM.
David Ross, managing director of Hometrack, said: “Climate change is a very real risk of material consequence. Average temperatures continue to increase and scientists and governments are looking at ways to reduce that impact. Regardless of how this plays out, every scenario will have ramifications for property values and mortgage markets.
“Along with transition risk brought about by emissions, lifestyles, transportation and energy, there are already physical risks that are manifesting as a result of climate change. Those risks show themselves in property desirability, safety and subsequently saleability and value.
“Our identification of that risk begins with identifying risks to the lender at the point of origination and portfolio to help them understand where their property is and what the risk of their location is.
“Our partnership with Terrafirma and Ambiental is the first of its kind and is one that we hope will deliver genuine, game-changing innovation, as we work towards solving climate change challenges for lenders worldwide.”