European Banks Pilot Green Mortgages

Some of Europe’s largest banks are trialling new European criteria for energy efficiency mortgages. 37 banks across the region are participating in the pilot scheme, which has been developed by Green Building Councils in the World Green Building Council’s Europe network and their partners under the EU funded Energy Efficient Mortgages Initiative.

The World Green Building Council (WorldGBC) says that there is rapidly growing investor demand for green mortgage-backed bonds and that the launch of the scheme is proof that big investors are increasingly recognising energy efficient homes as better investments. In addition the WorldGBC says that green homes have lower energy costs and will hold their value better over time so, they are increasingly recognised as less risky investments for both borrowers and lenders.

The pilot scheme will see participating banks explore lower interest rates for mortgages for new build homes which meet national ‘nearly zero energy building’ standards, as required by EU climate regulations; or that they are 20% better than national standards if nearly zero energy standards are not already in place. For renovations a 30% reduction in energy demand is required, with a new ‘Energy Performance Certificate’ issued after the renovation works as proof of this.

Responding to the launch of the European energy-efficient mortgages pilot scheme, Paul Ellis, Chief Executive of Ecology explained,

“If we are to meet our Paris climate agreement commitments, the finance sector needs to support the transition to a low-carbon economy.

 “Ecology has pioneered green mortgages for over 30 years. Our mortgages support the take-up of green building materials and low energy techniques such as Passivhaus for both new build and the renovation of existing buildings, which is crucial given the challenge of retrofitting our existing housing stock.

“We have proved that incentivising energy efficiency through mortgage pricing works, so we’re pleased to see more lenders across Europe joining us to start to examine the potential of green mortgages. We hope that this trial will result in a permanent and committed journey.

“In the UK, the Government needs to grasp the opportunity to support the green mortgage market further following the publication of the Green Finance Taskforce’s recommendations earlier this year. We need meaningful incentives for people to build or retrofit their homes to a high energy efficiency standard.”

For more information about the Energy Efficient Mortgages Initiative, visit the website.

Published: 17 June 2018

Author: Laura Baines