According to research from the Mortgage Advice Bureau (MAB), which polled mortgage lenders, nearly three-quarters – 74% – of those surveyed said green, net zero or energy efficiency-linked mortgages will become a “permanent part of their future product range”. This is a rise from 59% around a year ago.
More than a third of lenders don’t believe they’ve made sufficient progress in the green mortgage space.
Nearly half of lenders said they’ve made some progress but admitted that more can be done.
Around 78% of lenders said the green mortgage sector has “remained largely unchanged” in the last 12 months.
Approximately seven in 10 lenders agreed green mortgages will only partly replace traditional mortgages, but over a quarter believed all mortgages will become green mortgages.
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More than a third said the affordability of traditional mortgages for broader customer bases is more of a priority, with over a quarter pointing to exploring digitalisation and improving the efficiency of the mortgage application process.
Around a fifth believed responding to market competition and adapting lending strategies is key.
Karina Gerdes (pictured), head of Resilient Homes at MAB, said: “We all have a responsibility to push the housing market to a more sustainable future – one that is as energy efficient as possible. Green mortgage products are just one part of the puzzle, and it’s promising to see that a number of lenders share this thought.
“However, the pace of change is somewhat frustrating. Over 50% of our housing stock remains below the government’s goal of ensuring that most homes achieve an Energy Performance Certificate (EPC) rating of C or above by 2035.”
She continued: “If we are to succeed in the race to net zero, collectively we need to enhance the appeal of energy efficiency. Green mortgages are one of the tools that can help us to achieve that. Lenders could potentially increase the penetration of green mortgages by increasing the amount that can be borrowed to improve the efficiency of a property, or by offering a lower rate or cashback.
“Meanwhile, brokers could focus their efforts on starting discussions and educating their customers about the financial benefits of retrofitting. Working together, we can transition into a more sustainable, environmentally conscious housing sector.”
