Banks urged to consider climate risks when making mortgage lending decisions

Weather events, such as the 2011 floods in
Brisbane, pictured, have not had a large
 impact on bank losses. But a new report
argues these risks will increase over time

Banks are being urged to consider climate change risks in their mortgage lending decisions and investigate whether they may be holding loans against billions of dollars worth of properties under threat from changes such as rising sea levels.

A new report from the Climate Institute says banks' mortgage portfolios – which make up nearly two-thirds of the big four's total loans – may be exposed to risks, because of hazards made worse by climate change, such as flood, rising sea levels, storm surge and coastal erosion.

It was estimated in 2009 that $74 billion worth of Australian houses may be at risk from natural hazards, but the report says the current figure is "almost certainly" greater than this.

As the risk of damaging weather events grows due to climate change, the report says banks should take action to integrate climate risk into their mortgage lending processes.

Read Clancy Yeates’s story in today’s Melbourne Age - “Banks told to look at climate risks in mortgages”.