Do you know what a ‘green mortgage’ is?
You can probably hazard a good guess – but do you understand the nuts and bolts of these deals, which are rapidly increasing in numbers across the mortgage market?
If the answer is ‘no’ then you are not alone. New research has uncovered ‘worrying’ statistics that few people understand green mortgages. And this is despite the government committing to achieving Net Zero status by 2050.
The revelation has prompted one mortgage broker to question the effectiveness of the product and to call for more to be done to raise their profile and educate consumers.
So, what is a green mortgage?
In a nutshell, a green mortgage is a deal which provides an incentive for homeowners to improve their property’s Energy Performance Certificate (EPC) rating.
Energy performance is measured from A (very efficient) to G (inefficient). A green mortgage will provide a lower interest rate or another perk – such as cashback – for those with an energy efficient property. This usually means a home which is rated A or B on the EPC scale.
With the government pledging to become Net Zero by 2050 and 20% of emissions coming from buildings – the property industry has a large role to play in this goal.
Therefore, providing these green mortgages offers a way to boost the efficiency of homes.
The problem is, according to the Mortgage Advice Bureau, nearly two thirds of owner-occupied homes also have an EPC rating of below C.
What’s more almost two thirds of mortgage advisers reported their clients had not heard of green mortgages and did not understand them.
It means much work needs to be done to improve the energy efficiency of properties and reduce their carbon emissions and also to promote understanding of green mortgages.
Ben Thompson, deputy CEO at Mortgage Advice Bureau, said: “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.”
Mortgage Advice Bureau has developed a Green Hub to help educate consumers on the subject of green mortgages and how they can raise their property’s EPC rating in efforts to help reach the UK’s Net Zero goals.
