Climate Change Risk, the latest innovation from the business which provides insight and intelligence to the mortgage market, will enable lenders to gain greater control of their mortgage portfolio.

Indeed, the product can identify current climate change risk and also has the ability to assess how this threat is likely to develop over time.

It also allows lenders to actively manage their climate change risk in alignment 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 is delivered through each lender’s existing and integrated platforms, at origination and through back book portfolio assessment. This, said Hometrack, enabled quick and easy risk identification and decision management for lenders.

It also includes expert insights into flood risk, ground risk, energy and valuation.

• Flood Risk: Lenders will benefit from Hometrack’s partnership with Ambiental, the UK flood specialist, who 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.
• Ground Risk: Hometrack’s partnership with Terrafirma, the UK’s leading provider of ground risk analysis, will afford lenders a forensic assessment of the climate related risk associated with property including ground movement, mining, erosion and landslides.
• Energy: Unlocking easy access to critical data such as 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.
• Valuation: Modelling the impact of ongoing climate change on property values, the product translates geo-physical climate risk into easily understandable direct risk to property for lenders. The product is also fuelled by Hometrack data from over 50 million valuations per year, delivering unique benchmarking insights for customers. This 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.

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?”