BNP Paribas Fortis, Belgium’s leading mortgage lender, expects property prices to fall slightly this year, but this forecast does not apply to new buildings and energy-efficient homes.
Differences in energy performance will increasingly be felt in prices, the bank predicts. According to its calculations, with equivalent criteria, the price difference between a house with the best EPB (energy performance certificate for buildings) score and an energy sieve is already €84,000.
By 2050, the government wants every house to have the highest energy score. Achieving this will be a mammoth task, says Laurent Loncke, managing director of the retail division at BNP Paribas Fortis. “It depends on each region, but today about 5% of the real estate in Belgium is ready for 2050. We need to improve by 3% every year to reach the target.”
To achieve this, some €300 billion will have to be invested, he calculated, and 160,000 homes renovated every year.
BNP economists brace for 2% to 4% 'greenflation'
According to economists at BNP Paribas Fortis, these investments will have an impact on inflation. “We expect ‘greenflation’. That means a slightly higher inflation of 2%-4% in the coming years, linked to renovation costs,” says Tim Spellemans, a mortgage expert at the bank.
The spikes in gas and electricity prices this year have boosted renovation loans (+17%) at BNP Paribas Fortis, with an average of €95,000 borrowed, it notes. Even more spectacular, according to the banking institution, is the growth in the number of energy loans (+145%) that it has recorded. The majority (57%) of these loans are for the installation of thermal or photovoltaic panels.
For the rest, the 2022 balance sheet of the mortgage market is paradoxical to say the least, notes BNP Paribas Fortis. The total amount of mortgage loans taken out in Belgium has certainly increased by 3% to reach a record amount of €42.8 billion, but their number (255,000 loans) has fallen by 5% compared to 2021.
The bank, which finances one out of every four homes in Belgium, noted a 4% growth in the total amount of mortgages taken out (excluding refinancing) last year.
The era of low mortgage rates seems to be over
For economists, the sudden rise in long-term rates partly explains the decline in the number of loans taken out. After six years of reduced rates, the era of low rates seems to be over. Moreover, 13% of BNP Paribas Fortis customers have opted for a variable rate.
The bank has also noted a general increase (+9%) in the amounts borrowed in 2022, which averaged €203,000.
Being single and young does not seem to be an obstacle to access to property: 26% of mortgages were taken out by millennials last year. The number of loans granted to young first-time buyers even increased by 10% compared to the previous year and the loan-to-value ratio remained stable from one year to the next, at 81%.
With the number of loans up by 6% compared to 2021, singles and single-parent families represented 32% of the total amount granted in 2022.
