"Over 50% of our housing stock remains below the government’s goal of ensuring that most homes achieve an Energy Performance Certificate rating of C or above by 2035. If we are to succeed in the race to net zero, collectively we need to enhance the appeal of energy efficiency"
- Karina Gerdes - Mortgage Advice Bureau
MAB research, which polled some of the UK’s largest mortgage lenders, found although there has been a drop in the past 12 months, 74% believe that green or net zero/energy efficiency linked mortgages will become a permanent part of their future product range (up from 59% a year ago).
Despite this optimism, 35% of lenders don’t believe they’ve made enough progress in the green mortgage space. 48% of lenders confirm they’ve made some progress, but also admit more can be done. Looking more broadly at the industry, 78% of lenders believe the green mortgage sector has remained largely unchanged in the past 12 months.
Whilst some lenders agree that green mortgages will play a big part in their future product range, that doesn’t mean all traditional mortgages will be replaced. 70% of lenders agree that green mortgages will only partly replace mortgages as they are today. Although 26% of lenders believe all mortgages will eventually become green mortgages.
Lenders admitted there are more pressing issues above selling green mortgages. For example, 35% cite addressing the affordability of traditional mortgages for a broader customer base as the most pressing. 26% believe in exploring digitalisation and improving the efficiency of the mortgage application process, while 17% believe responding to market competition and adapting lending strategies accordingly is key.
“We all have a responsibility to push the housing market to a more sustainable future - one that is as energy efficient as possible, Karina Gerdes, Head of Resilient Homes at Mortgage Advice Bureau, said, "Green mortgage products are just one part of the puzzle, and it’s promising to see that a number of lenders share this thought.
However, she added, "The pace of change is somewhat frustrating. Over 50% of our housing stock remains below the government’s goal of ensuring that most homes achieve an Energy Performance Certificate rating of C or above by 2035. If we are to succeed in the race to net zero, collectively we need to enhance the appeal of energy efficiency.
"Green mortgages are one of the tools that can help us to achieve that. Lenders could potentially increase the penetration of green mortgages by increasing the amount that can be borrowed to improve the efficiency of a property, or by offering a lower rate or cashback.
"Meanwhile, brokers could focus their efforts on starting discussions and educating their customers about the financial benefits of retrofitting. Working together, we can transition into a more sustainable, environmentally conscious housing sector."
