Green finance and green housing are going to be essential ingredients in the drive for net-zero given that 21% of total carbon emissions in the UK come from our homes, according to the Energy Saving Trust.
Unlike two decades ago, it’s no longer the case that there's a problem without a solution. Green mortgage products exist, and green finance underpins it. Supply is in place. These products will evolve and become more sophisticated, but they do exist.
Plus, there’s a growing number of people who say that they will ‘act green’ and buy greener mortgages and use greener finances. We'd expect this to grow as the next generation of housebuyers comes through. However, there is a market challenge here as best advice dictates that we lead the consumer to the lowest priced option, which may not always be the greenest option. This is one example of a series of challenges that we'll need to address if we want higher adoption rates of green mortgages.
Adoption rates of green mortgages is a huge and complex challenge to solve, of course, but one with a simple two-word answer, I believe - ‘Collective Leadership’. By investing our time and resources in owning the problem today, we will be on the right side of history tomorrow.
So, what does Collective Leadership in our industry look like?
For me, the first step is that we, as an industry, need to own the problem. We need to collectively play our part in delivering net zero.
Imagine if we could agree that, where possible, one option out of any range of mortgage options shown to customers will always be a green option? By acting as responsible businesses, lenders, brokers and intermediaries, we will genuinely shift the dial, helping consumers to choose greener options by simply having them consider them in the first place. That would, in turn, encourage lenders to bring more green products to market.
My fear is that if we don’t do this, we may end up in an airline industry or auto industry situation where non-green options are hammered with additional tax burdens.
We need to act before Number 11 forces us to do so.
Will it really work?
How can we inspire positive behaviour change from people who simply want to buy a home affordably, as simple, fast, and efficiently as possible?
Our industry’s fear is that by acting alone, we will lose business to competitors who offer lower-priced deals or don’t mention green products at all. That’s precisely why we need collective leadership on this campaign.
Another partial solution will be to partly offset the higher costs of green mortgages through greater efficiencies.
We have already seen positive signs in the green mortgage market through our CloudTwenty7 platform, where lenders have taken a leadership role and offered better rates, cashback, and benefits to mortgage seekers willing to do their bit for the environment.
Likewise, rumblings from Westminster hint strongly that the government understands it must back the mortgage industry, and inspire eco-friendly consumer habits.
But, it’s not enough
There are so many bright and talented people in our industry, from lenders to brokers, home builders to tech innovators, and economists to lawyers. We have all the data and resources we need to make mortgages and remortgaging simpler and more efficient. Critically, we can all work together more collectively than ever before, and use this opportunity to change the world, while ensuring short term profitability.
Our industry has fallen far behind many other sectors in doing our bit for the green agenda, and that’s not acceptable. If we take this once-in-a-generation opportunity to step up, we can not only make a difference, but we can lead the rest into a better future.
