According to a survey from the Mortgage Advice Bureau (MAB), which surveyed around 458 advisers, four out of five (83 per cent) say their clients have no understanding of green mortgages.
The report found that only three per cent of advisers said their clients fully understand what a green mortgage is and 14 per cent of advisers said customers only partially understood.
Green mortgages are products which typically offer a discounted rate if a property has an Energy Performance Certificate (EPC) between A and C, but some do offer incentives to improve a property’s rating to above C.
The UK government is aiming for the UK economy to be net zero by 2050 and as housing makes up 20 per cent of emissions it is a significant area that needs improvement, MAB said.
Around two thirds of owner-occupied homes have an EPC rating of below C, which also means more needs to be done to improve energy efficiency, according to the report.
More education needed on green mortgages
Around 88 per cent of advisers said that green mortgages had come up in conversations in the last 12 months, which shows an increase in awareness.
However, 84 per cent said the topic was prompted by them, and only three per cent said the discussion was prompted by clients.
Just 30 per cent of advisers said they would actively propose a green mortgage product, and around 23 per cent said green mortgages were good in theory but not always suitable.
Around eight per cent of advisers said they needed to upskill their knowledge and understanding of green mortgages.
Most advisers (67 per cent) believe it is the responsibility of mortgage brokers to educate borrowers. This was followed by the government at 30 per cent and the media at 25 per cent.
‘Disconnect between benefits and knowledge’
Ben Thompson, deputy CEO at MAB, commented: “While the country’s net zero targets may seem far away, the reality is we are hurtling towards them at a faster rate than many realise. We no longer have the luxury of time, and the industry has a lot to do to not only decarbonise homes but increase consumer understanding of green mortgages and EPC ratings.
“Despite the number of green mortgage products coming to market, there is a considerable disconnect between their benefits and the consumer knowledge surrounding them. This therefore throws into question their effectiveness.”
He said that earlier this year MAB had created a list of commitments in principle for lenders, brokers and advisers to adhere to in order to help boost awareness of green mortgages and their benefits.
“The industry has an important role to play as educators for consumers, and we’ll continue to work with intermediaries to help push the green agenda forward,” Thompson said.
