Sustainability expert says the industry has a collective responsibility to go green
Only around half of lenders currently offer green mortgages, according to new data – with some brokers suggesting that there needs to be more of a focus from loan providers on how to deliver them. Research from Mortgage Advice Bureau has found that 52% of lenders offer green or net zero/energy efficiency-linked mortgages.
Despite 74% of lenders believing that green mortgages will become a permanent part of their future product range, 78% suggest the green mortgage sector has remained largely unchanged over the past year, and 35% of those surveyed by the brokerage admit that they’ve not made enough progress.
Karina Gerdes (pictures left), who leads Mortgage Advice Bureau’s sustainability brief, suggests that the industry has a collective responsibility to push the housing market to a more sustainable future – and faster. “The pace of change is somewhat frustrating,” Gerdes said. “Over 50% of our housing stock remains below the government’s goal of ensuring that most homes achieve an Energy Performance Certificate (EPC) rating of C or above by 2035. If we are to succeed in the race to net zero, collectively we need to enhance the appeal of energy efficiency. Green mortgages are one of the tools that can help us to achieve that.”
Gerdes, who won the title for Innovator Champion of the Year at The Mortgage Introducer Awards 2024, continued: “Lenders could potentially increase the penetration of green mortgages by increasing the amount that can be borrowed to improve the efficiency of a property, or by offering a lower rate or cashback. Meanwhile, brokers could focus their efforts on starting discussions and educating their customers about the financial benefits of retrofitting. Working together, we can transition into a more sustainable, environmentally conscious housing sector.”
Mortgage Advice Bureau reports that just over a third of lenders surveyed - 35% - admit that they think there are more pressing issues above selling green mortgages, including addressing the affordability of traditional mortgages. Some 26% believe in exploring digitalisation and improving the efficiency of the mortgage application process, while 17% believe responding to market competition and adapting lending strategies accordingly is key. Furthermore, 70% of lenders surveyed in its study agree that green mortgages will only partly replace mortgages as they are today.
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The popularity of green mortgages in 2025
What do brokers think though? How much demand is there from clients for green mortgages?
“Actual requests for green mortgages are limited, without me prompting or explaining the product,” said Michael Welton (pictured centre), from WPP Financial Services. “I always discuss green products in my initial meeting, when I ask about the type of property clients are buying or remortgaging. As more houses are built, then green mortgages will become more prevalent - but it very much depends on government legislation on EPC and energy efficiency in homes. I think there needs to be a focus on EPC A to C, leading into the product enhancements to ensure they are kept high profile.” Welton favours better financial incentives, noting green mortgages are currently only marginally better than a standard product.
Meanwhile, mortgage adviser Michaelle Lawson (pictured right), from Lawson Financial, hasn’t yet been asked by a client specifically for a green mortgage, and believes there aren’t the financial incentives to draw in borrowers.
“Most borrowers accidentally, or unknowingly, fall into the criteria for one,” Lawson told Mortgage Introducer. “There isn’t a significant saving on the green mortgages, mostly £250 cashback or a 0.01% saving on the interest rate which are all centred solely around the EPC when there are other green considerations. The costs of implementing the green upgrades for higher EPC ratings generally outweigh the financial benefits to the consumer, as the rental sector is finding. Lenders also have different policies, as some products are for A-B ratings and some are A-C, so I think this needs more uniformity.”
She added: “While there are environmental advantages of green mortgages, this is more about government drive and their agenda in my opinion than benefitting the end user.”
