Mortgage lenders in attendance at the Mortgage Advice Bureau (MAB) Green Mortgage event in London have made several commitments to reach net-zero targets by 2050. 

The event focused on the significant challenge that the ‘green agenda’ presents for the UK’s mortgage and housing markets.

During the event, commitments included creating a much wider mortgage product offering for people with an energy performance certificate (EPC) rating of D-G, rather than focusing on only the A-C EPC ratings.

After data showed that consumers would be unwilling to pay more for a green mortgage than they would a ‘normal’ mortgage, those in attendance at the event also committed to making green mortgages more competitive in terms of pricing. 

Meanwhile, energy efficiency is playing an increasingly important role for advisers in securing mortgages for their customers. Advisers have a large role to play in educating consumers on the options available to them after it was revealed that consumers have a lack of awareness of green mortgages. 

It was suggested that brokers should provide the consumer with both a ‘normal’ mortgage option as well a ‘green’ mortgage option to allow them to make the decision.

Cross-industry support was another commitment as speakers highlighted the importance of working together alongside industry bodies and working groups such as the Association of Mortgage Intermediaries (Ami), UK Finance, the Intermediary Mortgage Lenders Association (Imla) and the Financial Conduct Authority (FCA).

MAB deputy chief executive Ben Thompson said mortgage intermediaries and lenders have a “tremendous opportunity to deliver real social benefit and contribute massively to the 2050 net-zero target”.

“At MAB, we’re extremely interested in this and we’re fortunate to be right to the front and centre for changes coming and we really want to push the change,” Thompson explains. 

Changes in the market show an awareness of the green agenda, with many lenders launching green mortgages designed to reward owners of energy-efficient homes. But one speaker said that the industry is still “in the foothills of it, rather than halfway up the mountain in terms of getting the message across to consumers and brokers”.

However, more action is needed to see real change. At the event, one audience member highlighted that for targets to be reached, the narrative around green mortgages needs to change.

He said that “there needs to be more carrot and less stick” suggesting that the green agenda is seen as “negative” in the mortgage market and is “all about expense”. To tackle this issue, the audience member suggested learning from other industries such as the incentives around electric cars. 

Meanwhile, a panellist explained that green mortgages are only available to a handful of homeowners, including those who have self-built with sustainability in mind and buyers of new-build properties, suggesting that lenders could do something different around affordability modelling and policies. 

He said: “It’s not just about tweaking rates, or something totemic about green mortgages or greenwashing, I think it’s more about for those customers that perhaps can’t get on the ladder because of factors such as the cost of energy.”

“We need to make it much more compelling and memorable for the customer where they can do something energy-efficient wise when they get in a house.”

One attendee, Paragon Bank commercial manager Richard Saunders said: “Much of the conversation around housing and the move towards net-zero has been focused on pricing, incentivising homeowners and educating them in the regulatory changes coming down the line.”

“However, the elephant in the room is that a lot of homeowners don’t know precisely what needs to be done to their properties, exactly how much it will cost and where to source the tradespeople to complete the works. I feel we need a joined-up, government-backed framework which can be used by lenders, borrowers and intermediaries alike, to guide the transition.”

Meanwhile, Huel sustainability director Jessica Sansom, who was invited to the event to provide an expert view, advised the mortgage sector to become agitators and ask questions. 

“We need people who are willing to do all the things, we need people to keep asking the questions and agitating to say is this enough, is this going to drive change.”

“The industry needs to get started in a fundamental way that will deliver change. If you stick back and wait too long and just analyse the risk. We all need to get started in our personal lives, but we also need it in our professional lives.”

“This is a massive opportunity, and the industry is well placed to make a substantial difference and not something that will just sound nice and look good on paper it has to be real.”