Why we need to make green mortgages more attractive

IN a world shaped by our ever-increasing need to be more environmentally conscious, the mortgage industry has started to follow suit. However, more still needs to be done in this space to make green mortgages accessible and attractive.

Some lenders have already started stepping up to the plate, acknowledging the need to go greener. One option currently available is an enhanced affordability model, which is offered if you’re buying or remortgaging on a property that is more energy efficient.

Additionally, certain lenders are providing incentives like zero per cent home improvement loans and free Energy Performance Certificate

assessments. The Government is also playing a role in supporting homeowners with retrofitting, with initiatives like the Green Homes Grant offering financial support for energy efficiency improvements.

There has been progress on the developer side too, with Citu designing homes built to an EPC A standard here in Leeds.

The Mortgage Industry Climate Action Group is another example of how our industry is committed to going further in this space. It is pushing for a more holistic, sustainable approach to green mortgages.

Nevertheless, while we’re certainly moving in the right direction, there is still a need for a more forward thinking, proactive approach when it comes to greener lending.

Rather than green incentives being introduced more sporadically by individual lenders, it’s time for the industry to catch up en-masse and consolidate its efforts.

If you are looking at taking out a green mortgage, the most common product offering you will find is receiving a more competitive rate for properties with a high EPC rating, which measures a property’s energy efficiency.

However, this feels more like a tokenistic ‘box-ticking’ exercise from lenders. Imagine you are considering two properties: an energy guzzling Edwardian terrace and a modern, energy efficient home. While the latter might have a higher upfront cost, its lower running expenses would translate to significant savings over time. Rather, it should be the case that if you are purchasing a more energy- efficient property, that will likely be cheaper to run in the long-term, you should be loaned more money to get you where you need to be.

This is about getting lenders to accept that climate change isn’t just about energy-efficient appliances and EPC ratings. We need to focus on the bigger picture, embracing the technology and innovation available to make houses airtight and reduce reliance on gas boilers.

We need to work towards a future where green mortgages are standard practice for both lenders and borrowers and they are a mainstream option.

Making green mortgages accessible requires a two-pronged approach: lenders need to offer competitive incentives while embracing innovative technologies and construction methods that contribute to a greener future. By lobbying for change we can all play a role in driving sustainable housing practices. If you are buying a property that is energy efficient or intend to retrofit to make it so, ask a mortgage broker about possible incentives.