Recent research shows an 18 per cent increase in the number of Green mortgages available in just a six month period.
Financial information service Defaqto, in research up to late April this year, found that overall there was almost a fifth more mortgages linked to EPC rating and energy efficiency than six months earlier.
In total, there were 648 green mortgagees available in April compared to 550 last October.
The biggest change in that mortgage niche was in the Buy to Let sector where there were more than three times as many mortgages available to landlords: 292 green BTL products on the market in April, compared with just 85 last October. This is being driven by changes in the regulations for rental properties, which will have to have an EPC rating of C and above by 2025 for new tenancies.
Conversely, the number of mortgage products available to residential borrowers has fallen. In April there were just 356 mortgages available compared with 465 last year, around a quarter less.
So-called ‘Green’ mortgages are designed to offer borrowers preferential terms to buy a property that meets certain environmental standards. This will often be a new-build property that has a high energy efficiency rating, but they can also be used for properties where they have been renovated to improve their environmental performance. Generally, properties with an energy efficiency rating of A or B are eligible, although some lenders offer green mortgages for homes with a rating of C or above.
Katie Brain, consumer banking expert at Defaqto, says: “It is encouraging to see that the green mortgage market is growing. Although this is predominantly in the BTL sector, this still represents a sizeable number of homes that will be made more energy efficient as a result.
“If you are thinking of getting a green mortgage, it is worth discussing your options with a mortgage adviser who can explain what is available to you. Generally, newer homes will meet the criteria as they are built with modern regulations in mind, but older properties may need to be updated to ensure they are energy efficient.
"The cashback incentives typically offered with these ‘Green’ mortgages can make it worthwhile as opposed to the standard mortgage range.”
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