Saffron Building Society has launched a green mortgage and savings account in response to the government’s strategy to “accelerate the growth of green finance” announced last year.
The building society is offering a two-year fixed-rate ‘retro fit’ mortgage at up to 80 per cent loan to value.
The product offers an initial rate of 1.47 per cent, followed by a 1 per cent discount on the lender’s standard variable rate for the rest of the mortgage.
In particular, the mortgage aims to encourage borrowers to upgrade current housing stock to a better energy efficiency rating (EPC).
A rate reduction of 0.1 percentage points is available if borrowers make improvements to the energy efficiency of their property within six months of completing the mortgage.
“If updating a home, the mortgage offers an interest reduction reward for the remaining time of the two-year fixed rate, when the borrower can prove that any upgrades made to the property have improved the EPC by one band, to a minimum of a quite achievable E," Saffron said.
Laura Bright, product development manager at Saffron Building Society said she was “keen to create green products from Saffron that can help to further enhance the government’s strategy, whilst also taking the first step to a greener future for Saffron Building Society.”
Ms Bright added: “Each product offers a little incentive to encourage borrowers to think of the environment, whilst giving a little something to the charities working so hard to save our planet”.
The building society has also launched an instant access savings account - ‘Enviro Saver’ - that pays an annual interest of 0.35 per cent.
The rate is close to the average instant access rate, which stood at a record low of 0.3 per cent as of June 1, according to data provider Moneyfacts.
The savings account makes a 0.1 per cent donation to an environmental charity, which for this year is community volunteering charity The Conservation Volunteers.
Aaron Strutt, product and communications director at Trinity Financial, commented: "Most people understand that we need to do more to protect the environment and it is good to see Saffron taking action to join the government's plan for a greener future.
"It can be difficult for borrowers to opt for some of these deals because they usually are more expensive than standard mortgage products and they generally do not pay as much interest as the market-leading saver rates."
Saffron Building Society’s green mortgage launch follows lenders such as Barclays and Nationwide that also encourage energy efficiency.
In March Nationwide launched a ‘green additional borrowing’ product that offers borrowers a lower initial interest rate, if they spend at least half of the new advance to improve their property’s energy efficiency.