"Green mortgages have the potential to be a game changer in the delivery of affordable finance "
Eon has partnered with BNP Paribas Personal Finance to develop and pilot a Green Mortgage product, which would reward borrowers with discounted mortgage rates for increased energy efficiency measures in their homes.
Under the model, first-time buyers, home movers and remortgagors would be able to borrow further via a linked ‘energy efficiency home improvement loan’ to improve the energy efficiency of their homes.
BNP Paribas would provide the loan financing and Eon would provide a managed service to identify what measures would deliver the greatest savings potential and install the appropriate energy efficiency solutions.
The improvements could then result in a discounted mortgage rate once the energy efficiency measures have been verified via an updated EPC.
The Government's Clean Growth Strategy aims to bring as many homes as possible up to Energy Performance Certificate Band C level by 2035.
71% of UK households currently fall below an EPC Band C rating, which means they are missing out on energy savings of up to £380 a year.
Michael Lewis, chief executive of Eon UK, said: “We need to find ways to radically increase interest and action on energy efficiency in homes, but property owners often face a significant financing barrier when wishing to do so. In the UK, attempts have been made in the past to tackle this barrier through schemes like the Green Deal, but they have not been successful, in part because they weren’t designed with the customer front and centre.
“Green mortgages have the potential to be a game changer in the delivery of affordable finance and we are ready to meet the challenge for home-owners motivated to take the step into energy efficient living. Our agreement with BNP Paribas Personal Finance is a further step along this journey and brings together two well-known international companies with expertise in financing and delivering energy saving solutions across Europe.”
Stephen Hunt, CEO of BNP Paribas Personal Finance, commented: “BNP Paribas Personal Finance is pleased to work with Eon in exploring how helpful finance solutions can be developed to drive positive change within the energy efficiency sector. This collaboration will look to assess how an attractive consumer offer can be created for the UK marketplace and we continue to look at bringing new, innovative propositions to the market. As a pioneer in positive banking we are proud to play an active role in both driving forward new sustainable business opportunities and helping the local communities in which we work throughout the UK.”
Claire Perry, minister for energy and clean growth, added: “The UK has led the world in cutting emissions whilst growing our economy – with clean growth driving incredible innovation and creating hundreds of thousands of high quality jobs. Ten years on from the Climate Change Act, the first ever Green GB week is a time to build on our successes and explain the huge opportunities for business and young people of a cleaner economy. I’m delighted to see how many more businesses and organisations such as E.ON and BNP Paribas Personal Finance are seizing this multi-billion pound opportunity to energise their communities to tackle the very serious threat of climate change.”