New research from Mortgage Advice Bureau found that 83% of advisers say their clients have no understanding of green mortgages.
Over the past few years, the green agenda has intensified, with the UK Government committing the nation to be Net Zero by 2050. The property industry has a large role to play in reaching this target, with 20% of emissions coming from buildings. Nearly two-thirds of owner-occupied homes also have an EPC rating of below C, meaning much work needs to be done to improve the energy efficiency of properties and reduce their carbon emissions.
Green mortgages are one such way to help incentivise homeowners to boost their property’s EPC rating, yet only 3% of advisers say their clients fully understand what a green mortgage is, and 14% say their clients only partially understand them. This highlights a very clear need for educational work for consumers to help boost their knowledge and understanding of green mortgages.
Encouragingly, the topic of green mortgages is coming up in adviser-client conversations. 88% of advisers confirmed the topic of green mortgages has come up in conversation in the last 12 months, which is certainly positive in raising awareness of green mortgages. Of that though, 84% said the topic was prompted by them, with only 3% saying the topic was prompted by their clients.
However, while the topic is appearing in conversation, there is still work to be done when it comes to advisers recommending green mortgage products to clients. 30% of advisers say they actively propose green mortgage products. 23% say green mortgage products are fine in theory, but it’s not always suitable.
Understandably, 63% say that their main objective is to offer the most suitable mortgage product to their client, but this isn’t always a green one, perhaps showing the de-prioritisation of the green agenda. Describing their attitudes towards recommending green mortgage products to clients, 8% admitted they need to upskill their knowledge and understanding of green mortgages.
The research also questioned advisers on where they think the responsibility lies in helping educate consumers about green mortgages and EPC ratings. Most advisers believe it is the responsibility of mortgage brokers, with 67% saying this. 30% said it is the responsibility of the government. A further 25% said it is the responsibility of the media.
Ben Thompson, Deputy CEO at Mortgage Advice Bureau, commented: “While the country’s Net Zero targets may seem far away, the reality is we are hurtling towards them at a faster rate than many realise. We no longer have the luxury of time, and the industry has a lot to do to not only decarbonise homes but increase consumer understanding of green mortgages and EPC ratings. Despite the number of green mortgage products coming to market, there is a considerable disconnect between their benefits and the consumer knowledge surrounding them.
"This, therefore, throws into question their effectiveness. Earlier this year, Mortgage Advice Bureau compiled a list of commitments in principle for lenders, brokers and advisers to adhere to in order to help raise awareness of green mortgages and their benefits. The industry has an important role to play as educators for consumers, and we’ll continue to work with intermediaries to help push the green agenda forward.”
