The green mortgage market is growing, incentivising homeowners to make their properties more environmentally sustainable, according to independent financial information experts Defaqto.
So-called ‘Green’ mortgages are designed to offer borrowers preferential terms to buy a property that meets certain environmental standards.
This will often be a new-build property that has a high energy efficiency rating, but they can also be used for properties where they have been renovated to improve their environmental performance.
Generally, properties with an energy efficiency rating of A or B are eligible, although some lenders offer green mortgages for homes with a rating of C or above.
Overall, there is almost a fifth (18%) more mortgages than there was six months ago. In total, there are 648 green mortgagees available today compared to 550 last October.
The biggest change is in the buy-to-let sector where there are now more than three times as many mortgages available to landlords now.
There are 292 green buy-to-let products on the market today, compared with just 85 last October.
This is being driven by changes in the regulations for rental properties, which will have to have an EPC rating of C and above by 2025 for new tenancies.
Conversely, the number of mortgage products available to residential borrowers has fallen. Today they are just 356 mortgages available compared with 465 last year, around a quarter less.
Green 2-year fixed mortgage best buys for residential borrowers
| Term | LTV | Provider | Product | Initial Rate Payable | Minimum EPC rating | |
| 2 Year | 60% | NatWest | 2yr 2.19% Fixed LTV 60% | 2.19% | B | |
| 75% | NatWest | 2yr 2.19% Fixed LTV 75% | 2.19% | £995 | B | |
| 80% | Barclays | 2yr 2.48% Fixed LTV 80% | 2.48% | 0 | B | |
| 85% | NatWest | 2yr 2.36% Fixed LTV 85% | 2.36% | £995 | B | |
| 90% | Barclays | 2yr 2.55% Fixed LTV 90% | 2.39% | £0 | B | |
| 95% | Monmouthshire BS | 2yr 2.39% Fixed Energy Efficient LTV 95% | 2.39% | £1,149 | A |
Green 5-year fixed mortgage best buys for residential borrowers
| Term | LTV | Provider | Product | Initial Rate Payable | Minimum EPC rating | |
| 5 Year | 60% | NatWest | 5yr 2.30% Fixed LTV 60% | 2.30% | B | |
| 75% | NatWest Int Sols | 5yr 2.27% Fixed LTV 75% | 2.27% | £995 | B | |
| 80% | Halifax | 5yr 2.63% Fixed LTV 80% | 2.63% | £999 | B | |
| 85% | NatWest | 5yr 2.40% Fixed LTV 85% | 2.40% | £995 | B | |
| 90% | Barclays | 5yr 2.65% Fixed LTV 90% | 2.65% | £0 | B | |
| 95% | Monmouthshire BS | 5yr 2.69% Fixed Energy Efficient LTV 95% | 2.69% | £1,149 | A |
Katie Brain, consumer banking expert at Defaqto, said: “With today being World Earth Day, it is encouraging to see that the green mortgage market is growing.
“Although this is predominantly in the buy-to-let sector, this still represents a sizeable number of homes that will be made more energy efficient as a result.
“If you are thinking of getting a green mortgage, it is worth discussing your options with a mortgage adviser who can explain what is available to you.
“Generally, newer homes will meet the criteria as they are built with modern regulations in mind, but older properties may need to be updated to ensure they are energy efficient.
“The cashback incentives typically offered with these ‘Green’ mortgages can make it worthwhile as opposed to the standard mortgage range.”
