Mortgages  

How can advisers support the burgeoning green mortgage market?

  • Describe some of the challenges with green mortgages
  • Explain how green mortgages work
  • Identify the reasons for making green home improvements
CPD
Approx.30min

But there was encouragement too: 13 per cent of intermediaries have seen an increase in green mortgage enquiries since Covid-19, showing how the crisis has brought the green agenda front of mind for many. There is an appetite from homeowners to start taking energy-saving measures and – affordability permitting – scope for more borrowing to fund retrofitting. 

Education and calculation 

Awareness of green mortgages will inevitably grow as the range of products does. Though IMLA found that 29 per cent of lenders had already launched a green mortgage product or planned to, the industry should do all it can to publicise the options borrowers already have. 

It should also work to increase awareness of EPC ratings and the benefits – in terms of energy savings and property values – of improving it.

EPC ratings are held on a government register. Anyone can search the rating of properties – whether they are a prospective buyer or neighbour with a similar property who wants to see what is possible. There is also plenty of information on the key areas of energy inefficiency and the costs of addressing these. 

Advisers require support and guidance from the industry at large to encourage clients to use these tools, and ensure their clients’ details are added to the register. As, again, buyers cannot make informed choices about whether an energy-efficient upgrade is affordable and worth it if they do not have any basis on which to do the calculation. 

Critically, only around half of UK properties currently have an EPC rating. We need to ask just why this is and challenge the barriers preventing more homeowners from engaging. 

Of course, there is more that the government could be doing in all these areas, too. A survey from Countrywide Surveying Services found that, when asked who should fund retrospectively required energy-efficiency measures, almost three-quarters of property professionals said measures should be funded through a mix of public and government funding. Only 3 per cent said the public should take sole responsibility for the cost. 

And there is more the industry can and should do – not least because if it does not, the government is likely to step in. It has been reported that the government is considering setting lenders targets relating to energy performance. We want to avoid anything that could prevent us from focusing on getting the right customers the right deal for the right home.

More than that though, the industry should play its part because it is in a unique position to make a real contribution to the UK’s move to a greener future. And it should do so, because it is what borrowers, particularly a new generation of customers, want and demand. It is time we played our part.