The UK’s housing stock is one of the oldest in Europe. Approximately 20% of our homes were built pre-1919, 85% use a gas boiler for heating, and approximately 50% have uninsulated walls, according to the UKGBC’s Whole-Life Carbon Roadmap. The UK Climate Change Committee has estimated that £250 billion needs to be invested in UK home upgrades by 2050, which means that private finance actors – such as banks, building societies and institutional investors – have the opportunity to play a significant role in the coming years.
The need to unlock finance to retrofit homes in the owner-occupier sector is now clearly recognised, and the range of products available is beginning to grow, with pioneering financial institutions launching and continually developing new ways of lending for energy efficiency upgrades. More than 10 mortgage lenders in the UK have launched green mortgage products since the beginning of 2021 alone, but this is a relatively small proportion of the UK’s £1.58 trillion mortgage market. According to the Intermediary Mortgage Lenders Association, however, 77% of lenders are planning to launch green mortgages that are cheaper or priced the same as a typical product.
Acting as a central knowledge hub, the Green Finance Institute today launches a Green Mortgage Hub, an online resource collating publicly-available information on UK green mortgages into an interactive table, alongside a library of articles, report, tools and pilots related to the green mortgage market. The hub aims to inform and encourage lenders considering the green mortgage market, as well as being a trusted source of information for mortgage intermediaries, policymakers and NGOs focused on decarbonising the built environment.
Emma Harvey, Programme Director, Green Finance Institute, says, “The finance sector is starting to embrace the opportunities that green products offer to support their customers in the decarbonisation of their homes, and providing information, tools and case studies can help to encourage innovation. The Green Mortgage Hub will provide a snapshot of UK green home financing, acting as a resource for lenders to continue developing innovative green home finance solutions.”
The UK’s green mortgage market is currently divided between products that offer preferential mortgage rates for customers building or buying homes that are highly energy efficient, and those that offer attractive borrowing, in addition to an existing loan, for homeowners to improve the energy efficiency of their property. A third type offers free tools that help customers understand the possible home improvements available to their property.
The Green Mortgage Resource is part of a suite of tools and products being created by the Green Finance Institute’s Coalition for the Energy Efficiency of Buildings, which is working with finance, property, energy and policy experts to create the conditions and markets for private finance to flow into decarbonising our homes.