In the news: Making homes greener

Homeowners and buyers in the UK and Australia are being offered green mortgages as an incentive to purchase sustainable properties or make greener changes to their homes
by Bethan Rees


In the UK's journey to becoming a carbon net zero economy by 2050, how "green a property is will become more and more important", Esther Shaw writes in a Yahoo Finance article, and green mortgages will have a role to play in this.

To reach a net zero carbon target, homes require a drastic reduction in carbon emissions, and to help with this, some lenders are offering green mortgages, including Barclays, NatWest, Nationwide and Virgin Money. "A green mortgage offers a borrower an incentive either to purchase a green property, or to carry out work on an existing property to make it greener," Shaw explains. These can come with incentives such as favourable interest rates, cashback or an increased loan amount.

According to Shaw, research from the Intermediary of Mortgage Lenders Association finds that "57% of lenders plan to launch a green mortgage option after the pandemic".

Barclays is offering products on new build homes that have an Energy Performance Certificate (EPC) of A or B (under this rating system, A is most energy efficient and G is lowest). NatWest is also providing preferential rates on products for customers buying a property with an EPC rating of A or B.

Virgin Money's Greener Mortgages offers customers who buy "greener new build properties" a "range of products priced 0.1% lower than equivalent products", says Shaw, and Nationwide is offering up to £500 cashback for energy efficient homeowners.

The article quotes Sam Harhat, head of mortgage services and regulated sales at Andrews Mortgage Services. "It’s important to look at the overall mortgage product, including the loan-to-value (LTV), associated fees and costs over the term of the mortgage."

Andrew Montlake, managing director of broker Coreco, is quoted by Shaw. Montlake says that "green mortgages have a place in our future but to really work, they need to be more than just a gimmick ­– and come with bigger savings and benefits".

Yahoo Finance article 

Cheaper mortgages for greener homes

According to a survey by low carbon heating solutions company Vattenfall Heat UK, approximately 61% of people in the UK believe mortgages should be cheaper on homes that emit fewer emissions, reports Jack Carter in an article for Mortgage Introducer.

The research also finds that 62% of respondents would prefer to live in a home that did not produce carbon emissions, but respondents "were split over whether it should be more difficult to secure a mortgage for homes that are more polluting, with 32% on either side of this issue", says Carter.

The article quotes Mike Reynolds, managing director at Vattenfall Heat UK, who says "our research shows that although people want to live in low-carbon homes, most don’t know what they need to do to convert their properties nor how they would pay for it".

Mortgage Introducer article 

Greener mortgages in Australia

On the other side of the world, a mutual bank in Australia, Gateway Bank, is offering environmentally conscious borrowers a discount on their mortgage products if they have "environmentally sustainable homes", writes Annie Kane for Mortgage Business.

As part of its Pocket and Planet initiative, the bank has announced some new products including the Green Home Loan, for loans between AUS$250,000–AUS$2m on an 80% LTV ratio, and gives customers a discount of 0.15% if the property has at least three of the following:

  • Solar and photovoltaic panels
  • Solar battery storage systems
  • Solar hot water systems
  • Gas hot water systems
  • Solar pool heaters
  • Solar hydroponic heat pump systems
  • Rainwater tanks
  • Water pumps
  • Grey water treatment systems
  • Home insulation that meets government standards for the geographic area
  • Certified double glazing for windows
  • Split systems, evaporative cooler or star-rated zoned air-conditioning units with either a minimum energy rating 4/6 stars or minimum 6/10 stars
  • Energy-efficient LED lights in over 75% of the property.

The bank is also offering its "lowest rate personal loan, the Eco Loan, to help more Australians purchase and/or install environmental upgrades to their home", says Kane. Customers can access the loan if they're looking to install sustainable solutions into their home including solar battery storage systems, rainwater tanks and energy-efficient LED lights.

Also, for those wanting a more sustainable debit card, the Gateway Bank is launching a plant-based card made from fermented plant starch, such as corn, sugarcane or cassava.

Mortgage Business article 

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Published: 25 Jun 2021
  • Financial Planning
  • Wealth Management
  • Australia
  • sustainable investment
  • green finance
  • net zero carbon economy
  • mortgage

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