While the pressure is on the rental sector to get their EPCs up to scratch in time for the 2025 deadline, homeowners also need to step up. But making these adjustments to their homes can be costly, particularly against a backdrop of rising energy costs and a cost-of-living crisis.
This is where green mortgages come in.
The Financial Conduct Authority recently reiterated the growing role that green mortgages have to play in decarbonising the UK’s housing stock by helping borrowers to improve the energy efficiency of their home. This has become an industry-wide issue and everyone in the chain has a role to play.
That includes mortgage lenders and brokers.
Boosting awareness
Despite the urgent need to improve EPC ratings, there remains a distinct lack of awareness and understanding around green mortgages and brokers can help borrowers to understand the benefits.
Most green mortgages reward homeowners for having an energy efficient home. This might include lower borrowing rates or improved affordability calculations to reward those who take steps to lower the emissions in their home. Some green mortgage offerings also provide money towards making energy improvements on a property.
This is particularly useful if an individual is buying an older property that requires work to be done to bring up the EPC.
In the UK, our homes use 35 per cent of all the energy and emit 20 per cent of the carbon dioxide emissions. If the UK government is to deliver its targets of a 78 per cent emissions reduction by 2035, and net zero by 2050, household emissions need to be addressed.
Lenders and brokers hold the power to accelerate that change and create a sustainable, more energy-efficient and cost-effective way of life.
Not enough take-up
Despite the widespread benefits, existing green products in the market have attracted little interest and achieved little traction. Consumers are reeling at the current cost of living and rising interest rates. Keeping outgoings down to a minimum is the main focus and certainly occupies the mind more than your energy efficiency rating.
If the cheaper borrowing rates could help raise awareness of the benefits of efficient homes, further increasing the demand for energy efficient dwellings, then this can only be a good thing in the long run.
Competition in the lending market is fierce right now and one way to target customers is to improve the messaging when it comes to green mortgage products. Data will be key – having a better understanding of customers’ needs and being able to target more bespoke solutions to them is the only way to get the UK on target. Brokers should be offering green innovation as standard by now, but doing it in a way that makes sense to consumers.
It’s about money in your client’s pocket
Let’s tell them how much improvements will save them on monthly bills rather than telling them that the EPC rating has gone up five points.
We’ve turned a corner and homeowners are now acutely aware of the impact that their EPC has on both the climate and their monthly bills.
Now is the time to make sure homeowners are more aware of the exciting possibilities of green mortgages, what they mean for their pockets today and what they mean for the value of their assets going forward.
