In fact, you might well argue, given the huge amount of emissions that emanate from this country’s housing stock, that there is not only a huge responsibility on lenders in particular, but actually all of us, to make a difference.
Now, some might say they’re already ‘doing their bit’. We’ve seen a growing number of ‘green’ products but ultimately will they encourage the type of action that is required from homeowners to improve the energy efficiency of their homes? In their current guise, it’s doubtful in the extreme.
For a start, do some of these lenders even recognise where the true problem lies, because their ‘green’ products would suggest they don’t. Does the problem lie with the purchase of new-build, or indeed any, houses already at the A,B or C EPC level? Of course not.
So why are certain lenders offering rate and cashback incentives to purchasers of these homes? That is as true a definition of ‘greenwashing’ within the mortgage market as it’s possible to get.
So, instead, let’s all be upfront about what is required here. This is all about the existing housing stock of the UK and, in particular, those properties which are very far from being A, B or C on their EPC. We have a vast amount of Victorian (and other) housing which, if we’re lucky, scrapes an E, and that might only be in the private rental sector which has to be at this level in order for it to be let out.
In addition to this, we have the whole issue of cost. Now of course people socially and morally want to do their bit, however improving their homes is not going to come cheap.
There has been a lot of talk about heat pumps recently, but the fact of the matter is that most homeowners can’t afford the current cost of installing one, even if they are fortunate to be able to get one of the government’s £5,000 grants, of which there are only 90,000 available. There are over 22m homes in the UK which have a gas boiler by the way.
So, instead of lenders rewarding those who don’t need to take remedial action, or indeed rewarding those on lower LTVs who don’t really need the below-one per cent rates currently available, why not marry up a competitive rate with regular, yearly payments which can be used to improve the energy efficiency of those homes each and every year.
In traditional terms it’s cashback but delivered for each year of the deal and specifically to improve the energy efficiency of that home. Now of course the rate will reflect this but ultimately paying a little big more each month for the mortgage in order to secure that cashback is going to be more attractive to borrowers than saying they have to find tens of thousands of pounds right now, and their only option is to add it to the mortgage.
We, as an industry, need to start taking the lead in this; no doubt, working with the Government in terms of what it has to deliver and what it can offer, but not necessarily waiting for them to act.
This is not even a ‘green’ mortgage product, it simply becomes the norm for those properties or owners who are going to be required to improve their home to meet future standards and to ensure we get carbon emissions down considerably. There has been a lot of talk but little positive action in this area – the time to reverse that is right now.