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The Financial Conduct Authority has warned mortgage lenders not to take a ‘blind approach’ and exclude properties with low energy efficiency from the market.
David Geale, Regulator’s Director of Retail Banking, spoke on the growth and potential of green mortgages at the Bank of London Finance Institute’s Mortgage Conference.
“Green Mortgages” work by offering lower interest rates on properties with a higher EPC rating and by providing incentives for homeowners to upgrade their properties.
“There are huge opportunities here, but there are also some inherent risks. If you fail to meet your goals, such as reputation, you may face various problems.
“If lenders fail to come up with credible plans to meet their declared decarbonization targets, we are likely to take a very bleak view, and that could be seen in the market as yet another example of greenwashing. may be recognized.
“Lenders who take a blind approach and target only the most efficient properties will find it difficult to secure mortgages on less energy efficient properties, even if those properties are significantly upgraded. or have the unintended consequence of being very expensive.
“It will also penalize homeowners who are currently unable to make these improvements unaided and may become vulnerable, or already vulnerable. ”
About 60% of the UK housing stock is still EPC rated D or below.
Geale adds:
“During our workshop, we discussed various ways to mitigate this problem, such as making the incentives on offer more convenient and accessible. and has used up every last penny to pay for legal fees, stamp duty, moving, and the furniture they need. It may not be realistic or feasible.
“It also takes time to adjust to a new home. It may take.
“And to address this issue, some eco-friendly mortgages have emerged with incentives available at any point in the life of the mortgage. may be the least practical or affordable for
said Trudy Woolf, Director of Sustainability at Legal & General Surveying Services.
“However, for real and long-term gains in decarbonizing the UK housing stock, brokers and lenders will also need to prioritize sustainability efforts.
“Despite positive debate within the industry, customer awareness, education and understanding of green mortgages remains low, meaning there is huge untapped potential in green mortgages.
“In order to decarbonize the industry and create a better future for all, the industry must close the education gap.”