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How Green mortgages are changing the mortgage market

28 Dec 2022

UK homes remain the least energy efficient in Europe with the heating of homes representing 14% of our total carbon emissions


Green Home Grass

The aim of COP27 was to build on the outcomes of COP26 to act and tackle the climate emergency. This conference generated plenty of talking points and further emphasised both the gravity and enormity of the current and future situation.

From a housing and mortgage market perspective, we must recognise the part we have to play and this challenge is evident as UK homes remain the least energy efficient in Europe with the heating of homes representing 14% of our total carbon emissions.

This was highlighted in UK Finance’s new report, which proposed radical action to achieve a Net Zero housing stock in the UK.

It is likely to cost UK homeowners around £300 billion to reach the government’s required Energy Performance Certificate ratings.

The report set out a series of recommendations which broadly work within the key targets and measurement system laid out in the government’s Net Zero Strategy.

They seek to fire up the Net Zero Homes agenda in a systematic way which does not disadvantage more vulnerable consumers, blight properties and bake in unnecessary costs.

It points out that the banking and finance sector will be playing a key part in the transition to Net Zero homes but the targets cannot be achieved without cooperation across public and private sectors. And with 35 per cent of homes in the UK owner-occupied and mortgage-free, the lending industry cannot reach all homeowners alone.

What is the market saying?

How you can make greener improvements

What can lenders and intermediaries do?

Due to the widespread options of green products available throughout the BTL and residential mortgages, this has the potential to be one of the key growth areas in 2023. For lenders, this means a combination of greater transparency around their green offerings and developing more innovative and flexible ways to reward borrowers who are making conscious decisions to purchase more energy-efficient properties or make energy-related improvements.

For intermediaries, it’s about keeping up to date on green product offerings and ensuring that clients are fully aware of the available options and how they could potentially benefit. To continue this forward momentum and close this education gap, lenders, intermediaries and borrowers must embark on a more collaborative approach to ensure the mortgage market makes the impact that the green agenda needs and deserves.


*This article was originally published on Financial Reporter

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