Speaking at the Green Mortgage Summit, Andy Dean (pictured, second from right), head of housing development and sustainability at Lloyds Banking Group (LBG), said: “Engagement is one of the key challenges. I think consumer engagement is building, and it’s growing, but it has been slow, and equally, there’s a broker engagement aspect to it as well.
“We recognise that brokers have got a really important role to play in the sales process. We can see that progress in some areas, but it’s not universal. I think some broker firms have really switched on to the specialism and the additional value that they can provide to customers in providing green advice when it comes to refinancing and discussing the energy efficiency of homes, but there’s a large proportion that haven’t at the same time,” he said.
He pointed to an example where it had paid over 80 claims for the Green Living Reward to customers introduced by one broker firm.
The Green Living Reward rewards customers that are decarbonising and retrofitting their current homes, with Dean adding that the firm had paid out over £1m in claims through customers that have been introduced through intermediaries.
“They’re actively engaging with customers, talking about the benefits of retrofitting homes, the access to the products, and when it’s used well, it can be really effective, but we’re definitely not seeing that universally at the moment, so I think we’re on a bit of a journey still,” he noted.
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Dean added that there was a “recognition” that there is a “huge amount of complexity that goes into the broker sales process”, so “simply layering this on isn’t always going to be a straightforward process, and it’s not going to be something that switches on overnight”.
“It’s identifying the right conversations where there’s an opportunity to discuss that,” he said.
Dean added that conversations will be easier once there is regulatory and policy clarity, pointing to Minimum Energy Efficiency Standards (MEES), Future Homes Standards and Energy Performance Certificate (EPC) reforms that are coming down the track.
“Although we can now see a clearer direction of travel, previous policy uncertainty didn’t help the debate, and it didn’t help brokers wanting to engage with the topic naturally,” he explained.
Improving affordability could encourage more ‘green conversations’
Chris Hill (pictured, second from left), head of sales at Accord Mortgages, added that “there’s a lot more that our industry can do to demystify and explain green mortgages and finance”.
“I think some of the challenges around these products have been affordability, overall cost, and timely return on the investment.
“In terms of the market as a whole, the loan-to-income (LTI) changes that came along in July have made a significant impact, so we’re able to lend considerably more to people – in many scenarios, and that’s a big shift.
“Then there’s the cost element. For example, some of our customers have been repaying mortgages with rates of 4%, 5% and 6%. There’s a high hope, and many have priced this in, that the Bank of England will reduce the base rate a bit further, causing swap rates to drop, so then customers could well be repaying mortgages with rates starting in the 3% arena,” he explained.
Hill added that the “context of improving affordability and rates reducing could make a big difference for people when deciding upon their priorities” and that these improvements would “provide some space to help”.
Hill added that it was vital to “really think about how we demonstrate what’s in it for brokers too”.
“How can they stand out from the crowd and make the most of opportunities, achieving the best possible result for borrowers, in a market where technology is causing a significant shift?” he noted.
He added that he was involved in the Green Mortgage Advice Initiative, which has two workstreams that brokers could get involved with – Engagement and Strategy.
“We’ve got a lot of work to do to connect, inform and educate. I think the initiative is one opportunity to do that, but we need more help to go further. So, if you can get involved and support, please reach out via the website, which is https://greenmortgageadvice.uk,” Hill said.
Interested in learning more about green mortgages? See insights from the Green Finance Institute’s (GFI’s) Chloe Timperley here and pictures from the event here.
