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Energy efficient mortgages could change how buyers choose properties – Calder

by: Craig Calder, director of intermediaries at Barclays Mortgages
  • 24/08/2018
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Energy efficient mortgages could change how buyers choose properties – Calder
I can’t help but draw some comparisons with the electric vehicle market and green mortgages. Both are still in their relative infancy. Both are being championed at the highest governmental levels.


Both are also generating mounting demand from a rising number of environmentally aware consumers.

An increased ecological focus is illustrated through the implementation of a major new pilot scheme to see if green mortgages are a viable alternative for the European housing market.

Set to be rolled out across Europe, 37 of the continents leading banks have teamed up with the World Green Building Council to run the initiative.

The premise being that lower energy bills could make energy efficient homes a less risky investment for both buyers and lenders.

Under the pilot, part of the EU-funded Energy Efficient Mortgages Initiative, participating banks will trial the use of preferential interest rates, as well as other benefits, for green homeowners.

It certainly seems reasonable for energy costs to become a more integral component within the affordability equation, especially when all business sectors should be investigating ways to incorporate environmentally friendly policies where possible.

And the result of this particular pilot scheme could leave lenders in a much stronger position to extend ethical and risk-based decisions or boundaries.


EPCs could drive property buying

This is a movement which could also change the way buyers look at property purchases.

Although estate agents are legally bound to display energy performance certificates (EPCs) in property listings, few buying decisions currently hinge on energy and emission costs.

However, and in potentially similar vein to car buying of the future, this is a factor which could become far more prominent from a house purchase perspective.

We are a prominent advocate of this type of lending and reaction from the lending and intermediary community has been very positive, generating a great deal of interest and discussion.

Of course, it does remain a small component within the wider mortgage market; but it is one which will certainly continue to rise in prominence.

Like any emerging new sector, it needs education and support at the highest levels to help reach its true potential.

Competition is also key to its growth and further options do need to emerge if we are to help reward more environmentally-conscious property purchases.


£47bn savings

Green mortgage offerings are constantly being developed.

Developments which could lead to opportunities for specialist advice offerings to tap into a sector which may mature into a larger one than we ever thought possible, in a far shorter timeframe than many ever expected, and in more ways than anticipated.

Michael Lewis, chief executive of energy giant E.ON, suggested green mortgages could help unlock £47bn of savings for the UK by stimulating demand for energy efficiency technologies and services.

This figure highlights the vast potential and possible knock-on effects across many markets.

It’s not easy to determine exactly how big this market could become and the impact that it will have on new and existing homebuyers, lenders and the environment.

However, forward-thinking intermediaries should be looking closely at energy-efficient offerings to put themselves firmly in the driving seat to better service the needs of an increasing proportion of clients who are looking to establish and maintain a low-carbon, sustainable lifestyle.





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