The Building Societies Association (BSA) has welcomed the government’s £5m fund to help the financial sector develop green home finance products, like green mortgages.
Green mortgages give customers discounted rates after they have upgraded their home’s energy rating.
Paul Broadhead (pictured), head of mortgages and housing at the BSA, said: “We welcome the publication of the government’s green finance strategy.
“With around a fifth of the UK’s CO2 emissions coming from our homes, lenders and householders have an important part to play as the UK transitions to a net zero carbon-economy by 2050.
“The financial risks to lenders relating to climate change are becoming steadily better understood and we are working closely with both the PRA and the FCA.
“A few green/eco mortgages are already available from building societies and over time I anticipate that the opportunities for more will be embraced.
“The primary challenges in the development of such products will be consumer demand – and whether it materialises, coupled with the ability of lenders in a low interest rate, intensely competitive market to price such mortgages in a way that differentiates them.”
The government said it would offer the chance to win a share of a £10m fund for companies that design innovative ways of cutting the cost of retrofitting the UK’s old housing stock.
Broadhead added: “Up to now demand for loans to retro-fit existing homes has been muted, as we saw with the low take-up of the original Green Deal. It is to be hoped, with the undoubted change in mood and far greater focus on the threat of climate change, that things are now changing.
“It will be essential for clear factual information for consumers to be made widely available on the cost, benefit and environmental impact of such improvements. Retrofitting an existing home requires a substantial financial commitment upfront with payback over a period of years.
“We look forward to working with government, regulators and wider society on this important agenda.”