However, with growing numbers of people looking to improve their energy efficiency and carbon footprint, demand for green mortgage products is set to rise.
Back in October, a report focusing on green mortgages from the Intermediary Mortgage Lenders Association (IMLA) highlighted that 74 per cent of lenders expected green mortgages to become a larger part of the wider mortgage market in the future.
And as many as one in ten advisers have already noticed a rise in customer interest for this mortgage type since the onset of the Covid-19 crisis.
While nearly a third of lenders planned to or have already launched a green mortgage product, 35 per cent of intermediaries also intend to advise clients on green mortgages in the future.
In addition, 14 per cent of intermediaries have clients who have enquired about or taken out a green mortgage and 13 per cent have seen an increase in green mortgage enquiries since Covid-19.
An encouraging 58 per cent of intermediaries also expect consumer demand for green mortgages to grow in the future.
These are highly positive figures which certainly scream potential, although it won’t all be plain sailing as consumer awareness remains comparatively low.
There are still a number of misconceptions around cost, availability and accessibility which may also restrict initial growth to a certain extent.
A major focal point in the awareness process has to be led by the government. We know that there is a commitment in place to make Britain a carbon-neutral nation by 2050.
Upgrading the UK’s existing housing stock, to make homes across the country more energy efficient, will be critical to that goal.
A greater uptake in green mortgages will prove key in this journey and while there is widespread recognition of this throughout the lending community, we still have work to do to ensure we develop and integrate such products in the right way, with the right kind of backing.
The private rented sector will play a huge role in this and that is why we, as a sector, need to evaluate ways in which we can reward those landlords who are making environmentally friendly choices.
There has already been a real movement to increase the Energy Performance Certificate (EPC) ratings of rental properties, and as a lender we have introduced a green reward remortgage product to help incentivise further progress.
It is designed to work in tandem with the government’s Green Homes Initiative and we believe the move to improve carbon emissions in the property sector remains critical in 2021 despite current challenges.
And with the pandemic offering some insight into a more environmentally friendly world, we could see the mortgage market going greener sooner, rather than later.