Government unveils £5m fund to spur UK green mortgage innovation
The nascent green mortgage market has received a boost today, with the government announcing a £5m fund to help the financial sector develop green home finance products.
The £5m Green Home Finance Innovation Fund is aimed at accelerating the financial sector’s offering of green mortgages, which give customers discounted rates once they have upgraded the energy efficiency rating of their home, such as through installation or other measures.
The new funding will be awarded to innovative lending projects that incentivise energy efficiency retrofitting, such through equity loans and home improvement loans that help householders to make upgrades to their homes, the Department for Business, Energy and Industrial Strategy (BEIS) said.
The move comes amid signs of increasing interest in green mortgages from banks and mortgage lenders, whch are seeking to tap into reduced lending risks that should come through more energy efficient properties.
Last year Barclay’s launched its first ever green mortgage for buyers of new-build homes, while a pilot initiative led by 37 of Europe’s leading banks has been looking at how to further scale up the nascent market
The new fund came as BEIS also today announced a £10m Whole House Retrofit competition for companies looking to design new ways of cutting the cost of upgrading homes to higher green standards at scale, in a bid to slash building emissions and tackle fuel poverty.
Such innovations could include assembling parts of buildings off-site with pre-fabricated roofs or facades, thereby minimising disruption for homeowners, it explained.
The new funding comes ahead of the launch this week of the government’s Green Finance Strategy, to be overseen by a new Green Finance Institute (GFI) that will be tasked with accelerating green finance and investment in delivering support of a net zero economy.
Among the GFI’s priorities will be addressing energy efficiency and financing greener buildings, according to BEIS.
Homes are currently responsible for 15 per cent of the UK’s carbon emissions, and Acting Energy and Clean Growth Minister Chris Skidmore said the government was committed to making buildings “cleaner, greener and fit for the future”.
“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,” he said. “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.”