Advisers demand 'joined-up response' to green mortgages

As Leeds Building Society issued results from a survey that said 90 per cent of brokers expect interest in green mortgages to grow, advisers claimed there needed to be more innovation from lenders, valuers and even the construction industry if that demand was going to be met by suitable mortgages.

Alex Beavis, mortgages and later life proposition director at SBG, said: "We need more innovation.

"We need a joined up response between advisers, lenders, valuers and the construction industry to change behaviours and encourage retrofitting."

There's so much opportunity, but so little genuine innovation by lenders.--Blyth

Benjamin Blyth, head of mortgages at Rippled Mortgages, said: "In my opinion, we need to see real innovation from lenders".

He suggested flexibility such as 0 per cent on additional borrowing (alongside the standard rateable mortgage) for anyone who uses the funds for improving the home with ‘green’ improvements such as solar panels or heat pumps.

He said this would be "easy to offer", adding: "Also, if people need borrowing beyond the loan-to-value bracket of a lower rate, then allow them to keep the lower rate for additional borrowing if it’s used to make improvements rather than them jumping to the higher bracket.

"There's so much opportunity, but so little genuine innovation by lenders."

Meanwhile, Passivhaus self builder and engineer Simon Apperley said it would be helpful to get "sensible" quotes from mortgage lenders to build. 

He commented: "If we can ever get a sensible quote to build our Passivhaus, we will probably look at a green mortgage which has a lower rate for homes with Passivhaus certification."

Passivhaus helps people construct buildings that provide a high level of occupant comfort using very little energy for heating and cooling.

Growing interest post Cop-26

A survey by Leeds Building Society in December asked 69 members of its broker panel for their views on green products and whether they were noticing any changes in consumer demand or attitudes for this sector in the build up to Cop26.

According to the lender, four in five advisers have said inquiries for green mortgages over the past three months have increased compared with 12 months earlier, with almost three in five (57 per cent) seeing a significant increase.

Almost all the brokers surveyed (93 per cent) expected demand for green mortgages to increase further over the coming months, with half expecting demand to increase significantly.

Matt Bartle, director of products at Leeds Building Society, said: "Our research with intermediaries supports our view this is an issue the public is engaged with and a market which brokers can expect to continue to grow.

"What we’re starting to see is a groundswell of opinion from more people who are recognising that change needs to happen and seeking products to help them reach their goals.”

Of the brokers who took part in the poll, 43 per cent said their clients were more likely to choose a green mortgage over a lower cost standard mortgage, highlighting interest in green mortgage products, even at the expense of cheaper standard options.

However, one in six brokers said more needs to be done to increase awareness of green mortgages and energy efficient living.

In 2021, the lender introduced green mortgage deals to benefit those living in the most energy-efficient properties as part of its efforts to link its products with positive environmental impact.

In November 2021, it added a carbon offset benefit on all 95 per cent LTV fixed-rate mortgages for purchase, and pledged to invest in offsetting the forecast environmental impact of each home during the initial fixed term of the mortgage.

This pledge aims to offset the amount of carbon produced by heating/lighting/power usage by a typical Leeds Building Society property, calculated at 4.2 tonnes of carbon a year.

simoney.kyriakou@ft.com