"If lenders are serious about helping their customers improve the energy efficiency of their homes, they need to not only make it easier for homeowners to borrow money to fund energy efficiency improvements but also need to educate and inform consumers on both the practicalities and benefits of embracing energy-efficient home improvements"
Despite the green mortgage sector having grown considerably in recent years, and even though there is an urgent need to improve Energy Performance Certificate (EPC) ratings for properties around the UK, there continues to be a limited uptake of the available solutions.
A key factor is a lack of consumer awareness and understanding, not just in terms of mortgages and financing options, but also in terms retrofit solutions, with many homeowners having limited insight into decarbonisation, a lack of understanding of available energy-saving solutions, difficulty in finding reliable installers, and concerns related to installation disruptions.
If lenders are serious about helping their customers improve the energy efficiency of their homes, they need to not only make it easier for homeowners to borrow money to fund energy efficiency improvements but also need to educate and inform consumers on both the practicalities and benefits of embracing energy-efficient home improvements.
In fact, according to a report by Nesta, the UK’s innovation agency for social good, customers are no longer just looking for low-interest rates and flexible repayment terms when it comes to green finance; they want complementary support in the form of personalised home assessments, advice on which measures to choose, and how to find competent tradespeople.
Considering this, and the fact that the UK has some of the most inefficient, energy-hungry, and wasteful properties in Europe – residential homes account for one-fifth of the UK’s greenhouse gas emissions – making homeowners aware of their options and providing incentives can help drive the adoption of both green mortgages and energy efficiency measures across the country.
Banking on technology
Technology has a key role to play in helping lenders educate their customers about energy-efficient improvements and upgrades and encouraging them to take the necessary action to achieve net zero homes and generate substantial savings.
One solution is a software application designed to streamline the user experience and guide homeowners through the entire energy retrofit journey. Developed by Heero Technologies, it
enables lenders to offer their customers tailored home energy recommendations and insights in an easy-to-understand way. By removing complexity, homeowners are empowered to make decisions that will help them save money on energy bills, that will increase the value of their homes, and that will have a positive impact on the environment.
When faced with ignorant or hesitant homeowners, the app can be the launchpad for inciting action because it accurately shows which property-specific energy efficiency measures can produce the biggest gains, what the cost of installation is, as well as what savings can be realised if the suggested improvements are implemented.
Additionally, it helps address challenges such as finding trusted installers, the disruption caused by invasive energy efficiency measures, and confusion over financing and government funding.
Achieving ESG targets
While mortgages can be a vehicle for financing greener homes, they are also crucial in the financial sector’s own plans to reach net zero. According to the Financial Conduct Authority, emissions from mortgaged homes account for around 80% of lenders’ total emissions. If these properties aren’t decarbonised, lenders risk missing their own net zero and Environmental, Social and Governance (ESG) targets.
As the need to quantify carbon emissions and show verifiable reductions continues to grow, technology provides lenders with a validation tool that ensures they are meeting their objectives. It measures the amount of carbon saved, specifically lifetime carbon savings, which is valuable as besides regulatory compliance, customers are increasingly choosing service providers based on their ESG credentials.
It is undeniable that the banking and finance sector has a vital role to play in the UK’s transition to net zero. By turning to technology, lenders can be hugely influential in educating, guiding, and helping customers reduce emissions from their homes while driving down their energy bills.
