Some 74 per cent of lenders said they expected green mortgages to become a larger part of the market in the future, while 13 per cent of advisers said more clients were asking about them since the start of the pandemic.
In order to be successful, 71 per cent of advisers and three-quarters of lenders believe financial incentives similar to the Green Homes Grant would help drive interest and increase take up.
More than half of both lenders and advisers also want initiatives for lenders to encourage the provision of green mortgages.
Only a few want to see the government take drastic steps to achieve this however, as just 13 per cent of lenders and six per cent of advisers would welcome harsher intervention such as restrictions on the sale of inefficient homes.
Despite a desire for further state inclusion, the industry is still responding to an increasing demand for green mortgages, as 29 per cent of lenders plan to or have already launched a suitable product while 35 per cent of advisers aim to advise on green mortgages in the future.
Knowledge and financial barriers
Knowledge around green mortgages and the options available remains low, as the survey revealed 43 per cent of borrowers had never heard of the product type. Furthermore, a third expect them to cost more than a standard mortgage.
Some 77 per cent of lenders plan to respond to this misconception however, by launching green mortgages that are either cheaper or cost the same as a typical mortgage.
For borrowers who are aware of mortgages available, the costs of renovations remain an obstacle. Some 27 per cent of UK homeowners said the expense of improving their home’s energy efficiency was stopping them from taking out such a product.
Although costs were cited as an issue, the financial benefits of an energy efficient home were noted as more than half of respondents said they would be willing to take out a green mortgage to save money on energy bills.
Reducing their carbon footprint was also a listed as a reason to go for a green mortgage as 43 per cent said they would consider it if they knew it meant helping the environment and a fifth said they would go further and pay an extra £100 a month if it lowered their impact on the planet.
Kate Davies, executive director at IMLA, said: “Green mortgages might be in their infancy, but the indications are there that this is a part of the mortgage market that is set to grow in the years ahead.
“Lenders and advisers are already recognising the opportunities presented by green mortgages as consumers ‘switch on’ to eco-friendly products and recognise the devasting potential of climate change.”
She added: “Now, with a Covid-19 lockdown giving us all a temporary view of a world with reduced carbon emissions, the growth of the green mortgage market could accelerate yet further.”