Awareness of green mortgages has dipped among homebuyers, according to research from Mortgage Advice Bureau.
Almost two-thirds (65%) of advisers said clients had not heard of green mortgages and did not understand them – slightly up from last year (63%).
The research showed an uptick in the number of conversations with customers where the topic of green mortgages did not come up (16% versus 12% in 2022).
Advisers admitted that it was a challenge to educate and inform clients on Energy Performance Certificate (EPC) ratings and green mortgages when having to tackle conversations on the cost-of-living crisis (52%).
Almost one in five (17%) advisers said information overload was a challenge, making it difficult for homebuyers to trust advice, while 11% believed conflicting messages made it difficult to educate customers.
8% said the Government U-turn on the minimum EPC legislation for landlords created a challenge, along with the inaccuracy of EPC ratings (7%).
However, 22% of advisers admitted there should be more public awareness and education about the benefits of green mortgages.
One in four (25%) said that the mortgage industry should offer more competitive interest rates and incentives for green mortgage products.
Meanwhile, more than a fifth (22%) said the industry must develop a wider range of green mortgage products tailored to different needs and budgets.
Currently, the vast majority of advisers (82%) only offered clients a green mortgage when they know they have, or are looking at, a property that meets the criteria.
Despite a lack of discussion, 45% of advisers said there was noticeable progress in the green mortgage space compared with a year ago.
Ben Thompson, deputy CEO at the Mortgage Advice Bureau, said: “The past 12 months have seen advisers dealing with numerous challenges.
“Rising interest rates coupled with the higher cost of living has meant that for many customers, the cost of their mortgage has been front and centre.
“However, it remains vitally important that advisers keep having these conversations to inform customers if they (and the property they own/are buying) may be eligible for a green mortgage.
“There is also still a lot of progress to be made in this area from an industry point of view, and more to be done to make green mortgages more attractive.
“This could be innovations that give customers the potential to borrow more, receive a lower interest rate, or by offering other benefits.
“As the market settles and finds a new normal, green mortgage innovation should be at the very forefront of the industry’s priorities.”
