Date Published: October 2025
We’ve all seen the headlines — rising insurance premiums, major insurers pulling out of high-risk areas, and extreme weather events becoming more common. But what does all this mean for the mortgage industry?
In short: a lot.
As climate change continues to reshape our environment, it’s also reshaping the risks faced by homeowners and lenders alike. A recent study by First Street Foundation, a research group focused on climate science, projects a staggering 380% increase in weather-related foreclosures over the next decade. By 2035, nearly 1 in 3 foreclosures could be linked to climate-related events such as floods, hurricanes, or wildfires — up from just 7% today.
That’s not just a problem for homeowners — it has serious implications for lenders too.
More lenders are now evaluating how exposed their loan portfolios are to physical climate hazards. They’re asking critical questions like:
How vulnerable are our properties to floods or fires? What happens to asset values if insurance becomes unaffordable — or unavailable?
Two key factors are driving this growing concern:
Rising Regulatory Pressure: Federal and state regulators are beginning to expect financial institutions to assess and disclose climate-related risks.
Insurance Challenges: In some high-risk regions, insurance premiums have skyrocketed — or coverage has disappeared entirely. When borrowers can’t get or afford insurance, they may default, leaving lenders exposed to significant losses.
In response, lenders are starting to integrate climate risk data into both portfolio management and new loan decision-making processes.
At this point, it’s clear that climate risk isn’t a distant threat — it’s a present-day business issue.
What do you think?
How should lenders respond to the growing impact of climate change? We’d love to hear your thoughts — reply and let us know.
Read More here: https://climatecheck.com/blog/lenders-consider-climate-risk
https://www.cbsnews.com/news/climate-change-housing-foreclosures-credit-losses-first-street/
Author: Bretta Watkins
