1. Green mortgages are becoming more important
The green mortgage market is still in its infancy, accounting for a relatively small proportion of the UK’s circa £268bn mortgage market. However, with more people looking to improve their energy efficiency and carbon footprint, demand for green mortgage products is set to rise.
74% of lenders expect green finance to become a larger part of the wider mortgage market.
2. Demand - Lenders and brokers are optimistic about the future growth of the green mortgage
The majority of lenders (74%) expect demand for green mortgages to grow over the next few years, with 83% expecting the ability to save money on energy bills being the biggest driver behind market growth. Crucially, more than a third (35%) of brokers plan to advise on these products more often in the future, compared to a current figure of 2%.
58% of intermediaries expect consumer demand for green mortgages to grow in the future
3. Energy efficiency and landlords
Since April 2018, landlords have been required to achieve a minimum rating of E on the Energy Performance Certificate (EPC) on rental properties for new tenancies or tenancy renewals. This was extended in April 2020 to cover existing tenancies, meaning all rented properties will need to have an EPC rating of E, even where there has been no change in tenancy.
13% of intermediaries have seen an increase in green mortgage enquiries since Covid-19.
4. Landlords can now access generous cashback via the Foundation Home Loans ‘Green Reward’ mortgage
We are rewarding landlords who have proactively improved the energy efficiency of their properties, by giving them access to a product that delivers a very competitive rate, with a reduced fee and a cashback amount.
- £750 cashback on completion
- Reduced fee of 0.75%.
- Competitive rate (see our latest product guide here)
- Up to 75% LTV
The Green reward re mortgage is available on those private rental sector properties which have an Energy Performance Certificate (EPC) rating of ‘C’ or above – dated within the last 12 months.
29% of lenders have or planned to launch a green mortgage
5. The Government’s ‘Green Homes Initiative’ for Landlords has been extended to March 2022
Through the government Green Homes scheme, Landlords can access up to £5,000, covering two-thirds of the cost of measures such as insulation or upgrades to glazing or heating.
71% of intermediaries would welcome financial incentives from government, such as green vouchers.
6. It’s your opportunity to offer more to clients
14% of brokers have clients who have enquired about or taken out a green mortgage.
As with all niche mortgages, professional mortgage advice is critical, and this growing genre is an opportunity for mortgage intermediaries to share the values of their clients and offer additional value to their landlord and owner-occupier clients alike.
Ready to discuss a specialist mortgage? Speak to your regional BDM here.
FOR INTERMEDIARIES ONLY