The government has pledged £5m to help boost the number of green mortgages available to homeowners.
Green mortgages reward borrowers with discounted mortgage rates once they’ve upgraded the energy rating of their home. Government funding will help lenders develop new green products, so that this type of mortgage could become a more mainstream option.
Promoting energy efficiency
Plans for green mortgages form part of the government’s Green Finance Strategy, which also includes the chance to win a share of a £10m fund if companies design innovative ways of updating the UK’s old housing stock. For example, this might include assembling things like pre-fabricated roofs off-site so they can be quickly fitted to homes, with minimal disruption for homeowners.
Chris Skidmore, Energy and Clean Growth Minister, said: “To fulfil our world-leading commitment to reach net zero emissions by 2050, we need an overhaul of our housing stock to tackle the disproportionate amount of carbon emissions from buildings.
“By rolling out more green mortgages and reducing the costs of retrofitting older homes we’re encouraging homeowners to improve the efficiency of their homes and save money on their energy bills, helping to ensure everyone has access to a warm and comfortable home.”
The announcement of the funding for green home finance products has been welcomed by UK Finance, the trade body for the banking sector.
Stephen Jones, chief executive of UK Finance, said: "As an industry we stand ready to play our part in tackling climate change and achieving net zero carbon emissions by 2050.”
Green mortgage options available now
There are currently only a few green mortgage options available which incentivise homeowners to make energy efficient improvements to their properties.
For example, Ecology Building Society offers a discount on borrowing for customers using their mortgage funds to pay for green home improvements, such as installing solar panels or insulation.
Barclays also offers mortgages which support greener choices. Homebuyers taking out one of the bank’s Green Home Mortgages can benefit from lower mortgage rates on certain deals when they buy an energy efficient home.
Government announces funding for green mortgages