The Financial Conduct Authority (FCA) is examining how flood risk influences the mortgage market in England. The regulator aims to understand how geographical patterns of flooding could signal areas most vulnerable to climate-related financial risks.
The FCA’s review focuses on the relationship between flood risk and property valuations. It highlights that rising sea levels and extreme weather events are increasing the likelihood of flooding in certain regions. This, in turn, could affect mortgage lending decisions and insurance coverage.
This initiative follows growing concerns about the financial sector’s preparedness for climate change. In 2023, the FCA issued guidelines urging lenders to incorporate climate risks into their risk assessments. The current review builds on that by specifically addressing flood risk in England. The findings are expected to inform future regulatory frameworks for mortgage lending.
