COP26 has consumed huge amounts of column inches and caused endless debate this month. But how is the property market adapting and what changes do we need to see in mortgage products before homebuyers can witness tangible environmental benefits within their property purchase?
How transparent is your property purchase?
As London mortgage brokers ourselves, we witness first-hand the increasing client appetite for green mortgage products. Whilst we encourage our clients to think ‘green’ when it comes to home-buying, we are well aware of the lack of transparency of lenders when it comes to investing your mortgage money.
If you find yourself in the market for a new home, how easy is it to avoid taking out a mortgage with a lender that’s investing in fossil fuels?
Well, according to research by the Rainforest Action Network, 35 banks have invested USD$2.7 trillion into fossil fuels since 2016. And if you are one of the millions of people who borrow money from a financial institution to purchase your property, it’s likely that they’ve used your mortgage money to do it. As the single biggest financial product we buy, mortgages are hugely profitable and generate billions every year for banks to invest in products that they aren’t obliged to disclose to homebuyers.
This statistic really hits home just how far we still have to go for the green mortgage revolution to have any major influence.
Homes are big emitters
Greenhouse gases produced from UK homes still account for 15% of our total emissions, which means we need a huge drive to increase the EPS rating of our homes, if we are to come anywhere close to meeting the UK’s target of net-zero emissions by 2050.
According to experts, climate change risks are also set to play an increasingly substantial role in mortgage valuation and lending decisions over the coming decade.
That sort of thinking - attaching conditions to mortgages, or pricing them according to energy efficiency - could have a profound effect on the housing market, and potentially deliver better insulation more effectively than government action would require or afford.
If only it was as easy as ‘EPC’?
The mortgage industry has a huge part to play in the climate crisis. The environmental fallout is certainly not lost on the buy-to-let sector, as there is at least a predetermined pathway in place for landlords to increase the EPC rating of their rental properties by 2025.
We need to be collectively motivated to continue to hold politicians and large corporations accountable for making the changes we need to see happening behind closed doors, and make changes as to where mortgage money is invested. As well as taking the time to be clear on how our homes perform in terms of energy efficiency and the steps we need to take to improve our own EPC ratings.
Your home (or property) may be repossessed if you do not keep up payments on your mortgage or any debts secured on it.
Our range of processing and administration fees, on application, should you ask us to arrange a residential or buy-to-let mortgage is £395. If the mortgage does not go ahead a refund of £200 will be made.