Passivhaus Affiliate

Take green mortgages further says Ecology Building Society

Green monopoly houses cc by woodleywonderworksThis month green mortgages made the headlines as Barclays launches its first mortgage for energy efficient homes, offering a 0.1% discount to buyers of homes achieving an A or B EPC rating. It’s limited to new-build properties that have been built by one of five large housebuilders – Barratt Homes, Berkeley Group, Crest Nicholson, Countryside Properties and Redrow.

PHT Patron Member Ecology Building Society has pioneered green mortgages for over 30 years, offering discounts for the life of the mortgage for both the most energy-efficient new-build and renovations. Their financing supports the take-up of green building materials and low energy techniques such as Passivhaus, with discounts of up to 1.25% available for new and self build homes, and up to 1.5% available for retrofit – crucial given the challenge of bringing the UK’s existing housing stock to modern standards.

Barclays’ new offer follows in the wake of publication of the BEIS-commissioned Green Finance Taskforce report, which calls on the government to provide incentives and take other measures to boost the green lending market. While it’s welcome, much bigger strides need to be taken, according to Paul Ellis, CEO of Ecology Building Society.

If we are to meet our Paris climate agreement commitments, the finance sector needs to support the transition to a low-carbon economy. While it is positive to see another lender starting to offer a green mortgage, there’s no reason to think that this tie-up with the large house builders will do anything more than provide a modest reduction in mortgage payments for some new-build homes that were already going to be built. So this initiative may prove to be little more than a small initial step on what needs to be a permanent and committed journey.

Ecology Building Society

“Following publication of the Green Finance Taskforce’s recommendations, the Government needs to grasp the opportunity to support the green mortgage market further, with meaningful incentives for people to build or retrofit their homes to a high energy-efficiency standard. All our lending already takes green factors into account so we welcome the proposals to increase the visibility of energy efficiency ratings during the mortgage process. We are also encouraged by consideration of radical measures such as stamp duty reform which would help spur homeowners to take action.”

- Paul Ellis, CEO of Ecology Building Society

Research from other sources too, including the a recent project [PDF] conducted by Energy Saving Trust, BRE, Nationwide and others, is starting to demonstrate that discounted green mortgages make sound financial sense, not least because energy efficiency measures have a positive impact on mortgage affordability as they drive down householder bills.

To be further explored are the propositions that low energy homes have a lower risk of default, and that estate agents and surveyors should be valuing green homes more highly. Evidence from Denmark suggests this is true, finding that each one-notch energy improvement from G-A is worth between €5,400-7,400 to an average 100 m² property. These factors too should reduce the cost of mortgages for energy efficient homes. 


Further Information

Ecology Building Society

Green Finance Taskforce report

LENDERS project and report

18th April 2018

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