Green mortgages could help millions of homeowners make their houses more energy efficient where schemes such as the Green Deal have failed, according to Michael Lewis, the CEO of energy provider E.ON UK.
Improvements to heating, insulation, lighting and appliances could cut energy consumption and knock £270 off the £1,100 bill for gas and electricity that is the average for the UK home. Including the benefits to health from living in warmer homes, the boost to the economy among the installers of these cost-saving measures and the capacity saved in the electricity generating system, reducing the energy demand by just a quarter is potentially worth £47 billion, according to UK Energy Research Centre and University of Sussex Centre on Innovation and Energy Demand.
But people are missing out on these savings, on making their homes more comfortable to live in and worth more should they decide to sell, because they struggle to fund these essential changes to their ageing properties.
To combat this, E.ON has launched a pilot scheme for an Energy Efficient Mortgages Initiative, a standardised European framework and data collection process for energy-efficient mortgages promoting more favourable financing conditions for energy-saving buildings and renovations.
Unveiling it, Michael Lewis said, ‘We need to find ways to radically increase interest and action on energy efficiency but property owners face a significant financing barrier when wishing to improve theirs.
‘In the UK, attempts have been made to tackle this through schemes like the Green Deal, but they have failed in part as they weren’t designed with simplicity at the heart and with the customer front and centre.
‘Green mortgages have the potential to be a game changer in the delivery of affordable finance for homeowners motivated to take the step into energy-efficient living.’
More than 35 European banks have committed to test the implementation of the framework into existing product lines and processes, before an anticipated roll-out of an energy-efficient mortgage product in the future.
Easier access to affordable financing via a green mortgage should provide an added incentive for homeowners to better insulate buildings, replace old heating systems or increase their energy independence through solar panels, batteries or virtual storage. It is also intended to ease the purchase of existing energy-efficient houses through preferential financing in conjunction with a mortgage.
Michael Lewis added: ‘Improving the energy efficiency of the UK’s housing stock – which is already among Europe’s oldest and least efficient – should be a national infrastructure priority. Customers living in the most efficient homes are seeing hundreds of pounds of savings on their heating bill year on year, yet figures show around 19 million properties fall short of EPC level C, which is equivalent to 71 per cent of the UK’s 27 million homes.'