Consumer awareness of 'green mortgages' is low but the market is “poised” for growth, according to the Intermediary Mortgage Lenders Association (Imla).
Research from the trade association found 43 per cent of consumers had never heard of a green mortgage. The same percentage of lenders said there is currently little demand for green mortgages.
However, Imla found 57 per cent of lenders planned to launch a green mortgage offering after the pandemic.
It had surveyed 2,100 homeowners, 50 brokers and 24 lenders between August and October and found 13 per cent of the intermediaries had seen an increase in green mortgage enquiries since the pandemic.
Overall it found three-quarters (74 per cent) of lenders, and 58 per cent of mortgage brokers, expected demand for green mortgages to grow over the next few years.
Kate Davies, executive director at IMLA, said: “Green mortgages might be in their infancy, but the indications are there that this is a part of the mortgage market that is set to grow in the years ahead.
“Lenders and advisers are already recognising the opportunities presented by green mortgages as consumers ‘switch on’ to eco-friendly products and recognise the devastating potential of climate change.
“Now, with a Covid-19 lockdown giving us all a temporary view of a world with reduced carbon emissions, the growth of the green mortgage market could accelerate yet further.”
Green mortgages offer preferential terms if borrowers can show their property meets certain environmental standards.
But a third of consumers said they would expect green mortgages to be more expensive than a typical mortgage offering, while one in five said they would be willing to pay an extra £100 a month in repayments for taking out a green mortgage if it helped to lower their carbon footprint.
In actual fact, IMLA found that 77 per cent of lenders have, or plan to launch, green mortgages that are cheaper or cost the same as a ‘standard’ mortgage.
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