A new report from First Street indicates that severe weather events are significantly impacting mortgage lenders, expected to push foreclosures higher and lead to billions in credit losses. The study highlights how natural disasters, particularly flooding, elevate mortgage defaults, with estimates suggesting lenders may face up to $1.2 billion in losses by 2025, escalating to $5.4 billion by 2035. Florida, Louisiana, and California are anticipated to account for a substantial portion of climate-related mortgage losses, revealing systemic financial risks tied to climate phenomena in the mortgage sector.
"Mortgage markets are now on the front lines of climate risk," says Jeremy Porter, head of climateimplications at First Street. "Our modeling demonstrates that physical hazards are already eroding foundational assumptions of loan underwriting, property valuation, and credit servicing-introducing systemic financial risk."
The study shows that mortgage defaults and foreclosures surge after natural disasters, especially flooding, and estimates that mortgage lenders could face up to $1.2 billion in credit losses from severe weather events in 2025.
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