A group of mortgage lenders in Europe are piloting a new type of home loan which has the potential to help in the global fight against climate change.
To mark the 9th Annual Green Building Week, the banks and financial institutions with combined lending power of more than C$4.5 trillion are offering borrowers lower rates if they agree to spend extra on upgrading existing homes or building new ones that use less gas and electricity.
For the lenders, the discounts are offset by the lower credit risk for homes that have reduced future costs and hold their value for longer.
The mortgages meet standards set by the World Green Building Council which is calling on lenders, governments, and industry to grow a market for energy-efficient mortgages.
“Energy efficient mortgages offer a win-win for banks and borrowers here – lenders, industry and governments need to work together to ensure they reach millions of homeowners,” says James Drinkwater, Director of WorldGBC’s Europe network.
In a new report, the WGBC says that a staggering 97% of properties in Europe alone are not energy efficient, highlighting the long journey ahead. It calculates that 23,000 homes would need to be renovated every day for the region to meet its climate targets by 2030.
Game changer for mortgages
Michael Lewis, UK CEO of E.ON, one of WorldGBC’s European partners, says the green mortgages make sense.
“Millions of homeowners are missing out on cost savings, higher property values and more comfortable homes because of a lack of easy-to-access, affordable finance to invest in energy efficiency improvements. Energy efficient mortgages have the potential to be a game changer,” he says.