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Hometrack launches climate change risk product

Jessica Bird

June 15, 2021

paragon energy

Mortgage insight and intelligence business Hometrack has launched a climate change risk product to help lenders increase their understanding of the impact of climate change on property valuation, and meet increasing regulation from the Bank of England.

The product has been launched to identify current climate change risk, as well as assessing how that risk is projected to develop over time.

It will also allow lenders to focused on actively managing the climate change risk aligned to their risk appetite, distinguishing areas of concentration risk, and incorporating key climate change metrics into their mortgage origination strategies in real time.

The product brings together critical risk components, delivered through each lender’s existing and integrated platforms, at origination and through back book portfolio assessment.

Underpinned by a dataset of property valuations and an automated valuation model (AVM), Hometrack’s Climate Change Risk proposition enables lenders to model for both present and future risk.

Hometrack has an existing partnership with flood specialist Ambiental, which will provide river flow, rainfall, storm surge and climate change predictions.

The model includes testing for ten flood scenarios, facilitating faster risk assessment of each lender’s physical assets.

Through its partnership with ground risk analyst Terrafirma, Hometrack will afford lenders an assessment of the climate-related risk associated with property including ground movement, mining, erosion and landslides.

The product will provide access to data such as Energy Performance Certificate (EPC) ratings and an assessment of a property’s energy efficiency data, lenders will benefit from a present day view of the possible transitional and affordability risks to a property.

Modelling the impact of ongoing climate change on property values, the product translates geo-physical climate risk into direct risk to property for lenders.

The product is also fuelled by Hometrack data from more than 50 million valuations per year, which can be overlaid with other important property risk data to support lenders with more advanced risk mitigation where several risks are examined together, instantly, at the point of mortgage application.

Offering lenders a pre-packaged data service, supported by risk analysis tailored to meet their unique needs, the product is backed by the expertise of Hometrack’s dedicated data science team.

Hometrack’s climate change offering can deliver an assessment of risk on a lender’s existing mortgage portfolio, including market benchmarking to provide analysis on market trends in this space and a comparison to the rest of the market.

Lenders can also access climate change data at the point of mortgage origination.

Both capabilities can be provided as a one off or updated at the preferred frequency of the lender.

Theo Brewer, director of analytics and consulting at Hometrack, said: “We need to drive climate change up the agenda for the mortgage industry and effect change from within.

“For Hometrack and our customers, this really means accurately identifying where, when, how often and how severe climate change related risks are going to develop, as well as devising the appropriate strategies to continue lending whilst understanding and mitigating risks.

“Our solution is designed to provide lenders with a forensic view of climate change risk, combining scientific expertise across the flood, ground and property value modelling spaces with the ability to seamlessly integrate data and decisioning capability into their mortgage and credit risk platform.

“We have enlisted the best possible partners in Ambiental and Terrafirma to deliver a collaborative solution and ensure our customers benefit from the highest quality, most accurate and most current risk data that draws upon years of experience in modelling and understanding climate change challenges.

“Our solution extends beyond identification of where physical and transitional risks are located now and in the future, to understanding how property value, desirability and saleability may also be impacted.

“The addition of climate change events data and the ongoing study of how properties have responded to historic events puts Hometrack in a unique position to accurately solve for the next key question for lenders: what is the expected impact to property values?”


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