ESG mortgages, FCA ups the stakes!

In our last blog we focused on the fact that RMBS investors are genuinely becoming more ESG focused.  This is partly because of the premium that underpins a green transaction (the ‘greenium’), but also because regulators are starting to drive green issues.  The latter was brought back into focus in a recent FCA ‘Dear CEO’ letter to Retail Mortgage Lenders.

The FCA has helpfully refreshed its ESG strategy, setting out its target outcomes and the actions that it will take in 2022.  The tightening of FCA requirements will not only affect the manufacturers of mortgages, but the enhanced requirements will also influence future investors and investment strategies.  Where ESG is concerned lenders and investors can no longer sit on the fence.