"Green mortgages are a well-intended product, but they’re only scratching the surface in terms of helping to make the housing market more energy efficient."
MAB asked 64 mortgage lenders their plans for green mortgages, with only 25% confirming they currently offer a green or net zero mortgage.
However, of the lenders that don’t currently have green mortgage products, 88% said they have plans to do so.
The research also found that of those who have either bought a property or remortgaged in the past 18 months, just 14% had been offered a green mortgage product.
More than two in three (69%) respondents have not heard of a green mortgage, despite it potentially reducing monthly mortgage payments based on how eco-friendly their property might be. Of those who have not heard of a green mortgage, nearly half (45%) revealed they do not understand what the mortgage product actually is. Of those (31%) who said they do know what a green mortgage is, 15% admitted they don’t understand it.
When asked if they would pay more for a green mortgage, knowing they would be helping with sustainability and the environment, nearly two in five (38%) said they would. Yet, although the intention to help the environment is evident, consumers are hesitant, citing concerns of what the additional cost would be. A quarter (24%) of those who said they would consider paying more said it would depend on how much extra a green mortgage would cost them.
40% said they would not pay more for a green mortgage, even knowing it would help the environment. Delving into the reasons why, 24% said they can’t afford to pay any more, 20% don’t want to have to pay any more for their mortgage, and 12% said they already pay enough. A further 16% said they shouldn’t have to pay more to help the environment and 13% said they don’t know how it will help.
Ben Thompson, deputy CEO at Mortgage Advice Bureau, commented: “Green mortgages are a well-intended product, but they’re only scratching the surface in terms of helping to make the housing market more energy efficient. Existing borrowers, homeowners, and landlords who have properties below a C rating are encouraged to invest their own money to make their homes more efficient and less polluting. However, grants and incentives being offered by government is comparable to a drop in the ocean. Retrofitting a property could cost thousands of pounds which most homeowners may not have at hand to call upon. They’re therefore reliant on potentially borrowing against their property, which is where issues bubble to the surface.
“We welcome recent moves by lenders to look more favourably upon borrowers’ affordability based on them buying more energy efficient homes. This makes good sense and we’d like to see more of this positive action. However, we need combined industry thinking and innovation to work out how best and who best can influence those properties not meeting A, B, or C ratings to make sure the challenge is being properly tackled. Only then will the real benefits start to be felt.”
