There needs to be a “more proactive approach” from the government to “communicating the benefits of retrofitting homes”, including cost savings, installation considerations and costs and approved installers.
Speaking on an online masterclass as part of Mortgage Solutions’ Green Mortgage Masterclass series, Will Hinds, real estate manager for OSB Group, said there also needs to be “improved education” about the benefits of retrofitting homes, especially for brokers, noting that incentivising brokers to promote green lending deals is “another route that could be explored”.
One issue may be that, as green loans are small, there “might not [be] the sufficient fees” for brokers to promote these loans, he explained.
He noted there was an “information gap”, with homeowners seeing a reduction in energy bills as the “only measure of retrofit success”. Other benefits could include future-proofing and enhanced marketability.
Hinds added that there needed to be government incentives for the lenders to offer mortgage customers lower-cost additional borrowing for retrofitting.
“This could be used as a supplement to government subsidies or grants that are already available, or [that] are soon to become available again,” he said.
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He said a “more innovative approach to the whole green loan system is needed”, adding that the “availability of green loans is not actually that widespread”.
“There are some lenders [that] offer rate kickers for EPC improvements in buildings, or like ourselves; we have a bridging product whereby you can use it for refurbishment of commercial properties and some residential properties. But it’s really trying to promote those and make it actually financially viable for the for the end user,” he said.
When asked whether improved mortgage rates would boost green mortgage lending, he said the “higher interest rate environment” over the last couple of years was “squeezing everyone’s margins”.
“There’s been less money to reinvest in general, particularly into green initiatives, so a general trend downwards for mortgage rates across the board is likely to improve that, particularly when a lot of building owners and homeowners are commercially aware and they know that they’ve got to future-proof their properties and move with the changing environment,” he said.
