Craig Calder

Painting a greener picture for the mortgage market

Craig Calder

director of mortgages, Barclays

The transition to a low-carbon economy is today’s defining opportunity for innovation and growth. There is a significant opportunity for Barclays to play a leading role in helping to meet the demand for climate change-related financing and in supporting the energy transition, channelling investment into new green technologies infrastructure projects that will build up low-carbon capacity and capability. Our climate strategy means Barclays are rapidly expanding our green and sustainable financing activities, whilst reducing our financed emissions, focusing on the highest-emitting sectors first. We have already facilitated £74bn of green financing. This includes landmark projects such as supporting the UK government in issuing their first green bond, which will finance projects such as offshore wind and schemes to decarbonise homes and buildings. We were also one of the first banks to announce our ambition to be a net-zero bank by 2050 and, from a mortgage market perspective, the first major UK lender to offer a product that helps buyers to purchase a green new-build home.

Looking back to the initial launch of the Barclays Green Home Mortgage in April 2018, the reaction from the lending and intermediary community was extremely positive, and this generated a great deal of additional interest and discussion around this product type at the time. Since then, we have completed over 9,000 green mortgages.

It’s fair to say that the green mortgage market still has plenty of room for growth. In the wake of energy price hikes, awareness around the benefits of increased energy efficiency within the home is certainly on the up, and this is translating into some important forward momentum being experienced across the green mortgage space. With that in mind, it was interesting to see that searches for green mortgages grew by over a third (34 per cent) in July on Legal & General’s SmartrCriteria system.*

This energy-efficiency drive could also see UK homeowners spend more than £16.3bn on energy-saving home improvements over the next 12 months. According to research from MyGlazing.com, on average, homeowners are planning to spend £2,792 on energy-efficient home improvements and renovations over the next 12 months. Sixteen per cent plan to spend more than £5,000, and those in the baby boomer generation (aged 55 to 73) are set to spend the most, with the average spend among the age group being £3,401.**

In addition, a survey published on the 30 August 2022 by Kingfisher – the owner of B&Q and Screwfix – of 2,000 UK adults who own or rent property indicated that 60 per cent are more interested in energy efficiency than they had previously been, due to recent rising bills. However, just 40 per cent know their home’s EPC rating. Thirtyfour per cent were said to be planning energy efficiency improvements in the coming year, with the most popular measures being double or triple glazing and wall insulation.***

The survey also found that rented properties are, on average, more energyefficient than owner-occupied homes. However, 72 per cent of renters want their landlords to do more to improve the energy efficiency of their properties, while only one in five (20 per cent) said their landlords had made improvements in the past year.

Turning our attention to a buy-to-let sector that is embracing a range of green mortgage initiatives, at the beginning of the year we launched our first green BTL mortgage. This is available for new-build purchases that have an energy efficiency rating of 81 or above, or are in energy efficiency bands A or B – and, again, this has been met with a high degree of enthusiasm from intermediary partners and landlords who are looking to make greener choices.

It’s been a huge positive to see a number of green mortgage options emerge to reward more environmentally conscious property purchases in the BTL, mainstream, and specialist residential lending markets. Such progression is vital in delivering a greater range of solutions for potential buyers, existing homeowners, and landlords who are considering the financial benefits of opting for more energyefficient homes.

Looking forward, there remains room for sizable growth within this sector, and intermediaries will continue to play a central role in raising further awareness around green mortgage products, energy efficiency in the home, EPCs, retrofitting, and other factors that can benefit a range of borrowers over the longer and shorter term. * https://www.financialreporter. co.uk/mortgages/borrowers-consider-green-mortgages-amidst-mounting-energy-bills.html **UK homeowners set to invest over £16bn on green home improvements | Property Reporter ***Energy inefficient homes set to cost households extra £748 in bills from October (kingfisher.com)

SUPPORTING

the move to a low-carbon and sustainable lifestyle

Our innovative Green Home Mortgages rewards customers who are buying an energy-efficient new-build home directly from the builder or developer.

We’ll offer them a lower rate on certain fixed-rate mortgages compared with the equivalent option from our standard range, as well as some exclusive Green products (subject to lending criteria) Find out more at barclays.co.uk/intermediaries