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Green mortgages are a mystery to most borrowers

Written by: Anna Sagar
Almost two thirds (63%) of mortgage advisers say their clients have never heard of the term green mortgage, despite more deals coming to the market over the past few years.

According to a survey from the Mortgage Advice Bureau (MAB), which surveyed around 458 mortgage advisers, four out of five (83%) say their clients have no understanding of green mortgages.

The report found that only 3% of advisers said their clients fully understand what a green mortgage is and 14% said customers only partially understood.

What are green mortgages?

Green mortgages are products which typically offer a discounted rate if a property has an Energy Performance Certificate (EPC) between A and C, but some do offer incentives to improve a property’s rating to above C.

The UK government is aiming for the UK economy to be net zero by 2050 and as housing makes up 20 per cent of emissions it is a significant area that needs improvement, MAB said.

Around two thirds of owner-occupied homes have an EPC rating of below C, which also means more needs to be done to improve energy efficiency, according to the report.

How many advisers would propose a green mortgage?

Around 88% of advisers said that green mortgages had come up in conversations in the last 12 months, which shows an increase in awareness.

However, 84% said the topic was prompted by them, and only 3% said the discussion was prompted by clients.

Just 30% of advisers said they would actively propose a green mortgage product, and around 23% said green mortgages were good in theory but not always suitable.

How can advisers help borrowers?

Ben Thompson, deputy CEO at MAB, commented: “While the country’s net zero targets may seem far away, the reality is we are hurtling towards them at a faster rate than many realise. We no longer have the luxury of time, and the industry has a lot to do to not only decarbonise homes but increase consumer understanding of green mortgages and EPC ratings.

“Despite the number of green mortgage products coming to market, there is a considerable disconnect between their benefits and the consumer knowledge surrounding them.

“The industry has an important role to play as educators for consumers, and we’ll continue to work with intermediaries to help push the green agenda forward.”

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