Last month, the bank introduced an Energy Performance Certificate (EPC) rating to the bank’s online mortgage hub to show customers up to date information on the EPC rating of their property.
And last July, NatWest was reputedly the first bank in Europe to provide customers with an estimated carbon footprint associated with their monthly spend. To gain a greater understanding of homebuyers’ preferences, the bank also introduced the Greener Homes Attitudes tracker.
The NatWest’s policies are all aimed at helping customers become more energy efficient while ensuring that 50% of the bank’s mortgage book is at or above EPC ‘C’ or equivalent rating by 2030.
However, the results of the tracker revealed that only one in five households were “very concerned about the carbon emissions produced by homes in the UK”.
In addition, only around a third of UK households that are looking to buy a property over the next decade said they believed the EPC rating of a property was a ‘very important’ factor. On a more positive note, the results found that 63% of homeowners were planning to make green home improvements in the next decade.
Overall, the results have changed little since last year, when 55% of households rated flooding as the most important factor, followed by noise pollution, air quality and local green space, all of which ranked significantly higher than EPC rating concerns.
Lloyd Cochrane (pictured), the head of mortgages at the bank, admitted that while customers were becoming increasingly conscious of energy efficiency in their home, more needed to be done to raise awareness of what improving energy efficiency meant for individual customers.
“Consumers aren’t thinking about energy efficiency, particularly when they buy homes. That was something that I think we all assumed before July of last year. We’re now investing in this tracker that proves it. Unless the consumer recognises the importance and the value of energy efficiency ratings…then nothing else will be effective,” he told Mortgage Introducer this week.
Last year, the bank lent £728m in green mortgages to retail customers, a service that is only available for homes with A or B energy efficiency ratings, which roughly make up about 12% of the country’s current housing stock.
But banks and other businesses may find it even harder to drive the green message home in the coming months, with the cost of living increases about to hit households harder than ever, more so in the wake of the catastrophic Russian invasion of Ukraine – a component no-one had factored into the equation until now.
“I don’t think we can yet understand what, if any, demand this has on consumer confidence. It’s a very confused picture at the moment,” Cochrane admitted.
Nonetheless, he stressed that NatWest was determined to continue gauging customers’ response to its green policies and play an active role in educating households.
“We aim to be a leading voice supporting moves to reduce the impact of climate change, rather than just being in the mortgage business,” he said.
He highlighted the bank’s engagement in educational products, having established what it called the ‘sustainable homes and buildings’ coalition last year with a string of companies and associations, including Bosch, British Gas, Citizens Advice and Shelter to think about the challenge of greening UK homes.
But with emissions from homes making up about 15% of UK carbon emissions, Cochrane recognized that in order to reach the net zero targets that the government had set for 2050, there would need to be “fairly significant changes” in the UK housing market – a direct hint that the government might need to get involved a lot more.
“Lenders are only a part of solving that problem. You’re talking about around about 28 million homes in the UK – individual actions that need to be taken by consumers and a lack of understanding of what those actions need to be.”
