Ambitious global net zero targets have been promised during COP26, and industries are having to adapt to meet national targets set out.
Mortgage Advice Bureau (MAB) asked 64 mortgage lenders in the UK what their plans were for green mortgages. Findings show only one quarter (25%) of those surveyed currently offer green or net zero mortgages, but of the lenders that don’t currently have green mortgage products, 88% said they have plans to do so. MAB also sought to uncover how many consumers are being offered green mortgages. Of those who have either bought a property or remortgaged in the past 18 months, just 14% had been offered a green mortgage product.
MAB surveyed consumers to understand their knowledge of green mortgages. Research found that more than two in three (69%) respondents have not heard of a green mortgage, despite it potentially reducing monthly mortgage payments based on how eco-friendly their property might be. Of those who have not heard of a green mortgage, nearly half (45%) revealed they do not understand what the mortgage product actually is. Of those (31%) who said they do know what a green mortgage is, 15% admitted they don’t understand it.
As the nation moves towards a more sustainable future, consumers are being increasingly encouraged to change their everyday lifestyles, from the way they travel, to plastic consumption and their food choices. But even with an increasing number of green mortgage products and incentives coming to market right now, there is currently a lack of uptake.
When asked if they would pay more for a green mortgage, knowing they would be helping with sustainability and the environment, nearly two in five (38%) said they would. Yet, although the intention to help the environment is evident, consumers are hesitant, citing concerns of what the additional cost would be. A quarter (24%) of those who said they would consider paying more said it would depend on how much extra a green mortgage would cost them.
Two in five (40%) respondents said they would not pay more for a green mortgage, even knowing it would help the environment. Delving into the reasons why, 24% said they can’t afford to pay any more, 20% don’t want to have to pay any more for their mortgage, and 12% said they already pay enough. A further 16% said they shouldn’t have to pay more to help the environment and 13% said they don’t know how it will help.
| I can’t afford to pay more | 24% |
| I don’t want to have to pay any more for my mortgage | 20% |
| I shouldn’t have to pay more to help the environment | 16% |
| I don’t understand how it will help | 13% |
| I pay enough for my mortgage | 12% |
| I don’t think I’m eligible | 9% |
| I do enough already to help the environment | 9% |
| I don’t want to change my mortgage | 8% |
| I don’t trust my provider to pass on the money to greener causes | 8% |
| I don’t trust green mortgages | 7% |
| I don’t agree with green mortgages | 6% |
| It’s not my responsibility to help the environment | 4% |
| My current provider doesn’t offer a green mortgage | 3% |
Ben Thompson, deputy chief executive officer at Mortgage Advice Bureau, said: “Green mortgages are a well-intended product, but they’re only scratching the surface in terms of helping to make the housing market more energy efficient.
“Existing borrowers, homeowners, and landlords who have properties below a C rating are encouraged to invest their own money to make their homes more efficient and less polluting.
“However, grants and incentives being offered by the Government is comparable to a drop in the ocean. Retrofitting a property could cost thousands of pounds which most homeowners may not have at hand to call upon. They’re therefore reliant on potentially borrowing against their property, which is where issues bubble to the surface.
“We welcome recent moves by lenders to look more favourably upon borrowers’ affordability based on them buying more energy efficient homes. This makes good sense and we’d like to see more of this positive action. However, we need combined industry thinking and innovation to work out how best and who best can influence those properties not meeting A, B, or C ratings to make sure the challenge is being properly tackled. Only then will the real benefits start to be felt.”
