The mutual is also increasing rates on high loan to value (LTV) deals and trimming them on products with a high deposit.
Nationwide said at least half the cash taken from its green additional borrowing product must be used to fund a range of sustainable enhancements, such as solar panels, boiler upgrades, insulation or electric vehicle charging stations.
The loans are only available to existing mortgage members and come with reductions of up to 0.69 per cent on existing no fee, two- and five-year fixed further advance rates.
As a result, rates will start from one per cent, with no product fee and can be used for borrowing between £5,000 and £25,000, up to a maximum of 90 per cent LTV.
There are no limits on which suppliers borrowers can use, but the products are only available directly from Nationwide.
High LTV rates higher
Nationwide is also increasing its two-year fixed rates at 95 per cent LTV for house purchase and first-time buyers by up to 0.15 per cent.
The deal with a £999 fee is increasing by 0.15 per cent to 3.09 per cent, while its fee-free version is rising by 0.05 per cent to 3.19 per cent.
Meanwhile, rates for three- and five-year remortgage products available up to 60 per cent LTV are reducing by 0.10 per cent to 1.44 per cent with a £999 fee, while fee-free deals will be reduced 0.05 per cent to 1.69 per cent.
For switchers and further advances, rates for two-, three- and five-year products available up to 60 per cent LTV are reducing by up to 0.15 per cent.
Nationwide director of mortgages Henry Jordan (pictured) noted there was an urgent need to reduce carbon emissions from homes and that meaningful incentives were the only realistic way to help people make their homes more sustainable.
“This new loan is the first product we are launching as part of our wider commitment to make £1bn available to kickstart green home improvements,” he said.
“With more than 1.5 million homes on our mortgage balance sheet, we believe offering this new loan can make a real difference as we play our part in helping to tackle the climate crisis and help members to do the same.”