Greenwashing (mortgages)

I think we have to be careful with accusing some potentially well-meaning moves in the mortgage industry, which is not well known for its ability to rapidly evolve, with the "greenwashing" label. Although very limited in scope at the moment, the key thing is that there is change, lenders are looking at how to help meet this challenge that has been placed in front of them. Lenders themselves are not happy with the situation and will admit that they need to do more than they are currently, but finding how to do that is difficult; not only are there the normal internal system issues to deal with, but they also need to think about liability issues and how any new product offering would be viewed by the PRA and FCA. Sadly, this is not a market where someone can have an innovative idea on Monday and have it selling on Friday, but this is a hot topic and change will come.

This might not be the kind of answer that you are wanting but "Green Mortgages" are probably the last thing on mortgage applicants' minds at the moment, let alone the stressed mortgage adviser's feelings in this regard. We seem to be locked in a cycle of continuous crises that have affected the UK mortgage market of late, be it Covid, the Ukraine war, the Inflation rate, or the "went a bit too far" mini-budget, things just need to relax a little before consumers, advisory firms, and lenders start to seriously look at the green agenda on household finance transactions, sadly. I'd like to see lenders eventually agreeing for applicants who have signed up for an EPC home improvement Remortgage on seeing the property improve their EPC banding to then allocate monies to fund community improvements following a green agenda e.g. home insulation, water efficiency, upgrade lighting to led, localised battery power backup for public use, triple glazing etc but maybe I am living in a fantasy land.

So far the rush to "Green" mortgages by some lenders appears to be more tokenistic than actually of any significant incentive or benefit to borrowers.
In the majority of cases, the only difference between a "green" and "normal" appears to be the offer of a £250 or similar amount of cashback with rates largely being identical or with negligible differences of 0.01%. With the continuing shortage of housing,client priorities are simply around identifying and securing the home they want.Rarely is the greenness or otherwise a factor in this or their mortgage preferences and until the incentives offered by lenders become less underwhelming and a supply of more eligible housing is evident, then it's hard to see how the current client apathy in this area will change. If a green option is available and best then this will be advised with any nominal client benefit gleefully accepted but until saving the planet means saving significant pounds, this isnt going to be a primary factor for most

Across the board, its not that likely that a green product will be the best one for the client. Some lenders are offering them, but the majority of green lending we do is when either the deal stacks up best, or the clients have requested one when a non-green has been cheaper. For green products to really work, they need to make significant changes such as no fees or much lower rates.
It would be amazing if X lender had a better affordability test if the property is in the better EPC range - the better EPC houses are, after all, supposed to have lower utility bills.

I would love to see more in this space, please see my responses below:

I don't see alot of greenwashing, even worse, I feel lenders, particularly banks, are apathetic towards green mortgages, merely having it as a tick-box exercise. The lending doesn't drive any decisions from potential buyers as to what houses to purchase, as there is so little difference in the prices of these mortgages, which is typically seen as a nice little bonus (typically around 0.1% saving on the rate or a token cash back of maybe £250) rather than driving any client buying decisions on the type of property they seek.

Only recently has our sourcing system (Twenty7Tec) allowed us to source for green mortgages, which we can now do. We also cross-reference with the ethical mortgage lender tables in the good shopping guide, which have the Ecology Building Society at the top and the only ones looking to make a real difference in this space.

Overall, more work is needed in this space!!