Research from the Mortgage Advice Bureau reveals a decline in awareness of green mortgages among homebuyers. This signals a decrease in understanding among individuals looking to purchase homes.
Currently, about 65% of advisers mention that their clients haven’t heard about green mortgages and don’t grasp their concept – a slight increase from last year’s 63%. This indicates a persistent lack of awareness among clients.
The latest findings from the Mortgage Advice Bureau highlight a rise in the percentage of conversations with customers where the topic of green mortgages hasn’t been broached, increasing from 12% in 2022 to 16%. This indicates a notable shift in the frequency of discussions around such mortgage options.
Challenges Faced by Advisers in Promoting Green Mortgages
According to the Mortgage Advice Bureau, a key reason for the lack of discussions on green mortgages is likely the multitude of challenges faced by advisers in a turbulent year.
Many advisers have found themselves grappling with numerous difficulties, leaving little room to prioritize the green aspect.
Advisers acknowledge that educating clients on EPC ratings and green mortgages becomes challenging, particularly amid discussions about the cost-of-living crisis (52%).
The pressing issue of retrofitting costs takes precedence in advisers’ considerations, making it difficult to divert attention to sustainable housing solutions.
Nearly one in five advisers (17%) identifies information overload as a challenge, making it challenging for homebuyers to trust the advice provided.
Additionally, one in ten advisers (11%) finds difficulty in educating customers due to conflicting messages.
Another challenge mentioned by 8% of advisers is the government’s U-turn on minimum EPC legislation for landlords, while 7% highlight the inaccuracy of EPC ratings as an obstacle.
Despite the challenges faced, advisers remain cognizant of necessary actions. A notable 22% acknowledge the imperative need for increased public awareness and education about the advantages of green mortgages.
In terms of enhancing knowledge and expediting efforts, 25% of advisers propose that the mortgage industry should provide more competitive interest rates and incentives for green mortgage products.
This suggests a potential avenue for encouraging wider adoption of environmentally friendly housing finance options.
Meanwhile, 22% of advisers suggest that the industry should focus on developing a broader array of green mortgage products tailored to various needs and budgets.
This underscores the importance of catering to diverse preferences and financial capacities in promoting sustainable housing options.
Presently, a significant 82% of advisers exclusively present clients with green mortgage options when they are certain the property aligns with the product’s criteria.
Surprisingly, even amid limited discussions, 45% of advisers note considerable advancements in the sector compared to a year ago.
Insights from Mortgage Advice Bureau’s Ben Thompson
Deputy Chief Executive of Mortgage Advice Bureau, Ben Thompson, remarks,
“Over the past year, advisers have grappled with various challenges.
Escalating interest rates and the increased cost of living have brought the cost of mortgages to the forefront for many customers.
Nevertheless, it remains crucial for advisers to continue these discussions, ensuring customers are informed about potential eligibility for a green mortgage based on their circumstances and the property they own or are acquiring.”
Thompson underscores,
“There is considerable room for progress within the industry, and efforts to enhance the appeal of green mortgages should continue.
Innovations, such as providing opportunities for increased borrowing, lower interest rates, or additional benefits, can contribute to making green mortgages more enticing.
As the market stabilizes and establishes a new norm, prioritizing innovation in green mortgages should be at the forefront of the industry’s agenda.”
