Mortgage rates should be cheaper for owners of energy efficient homes


Owners of energy efficient homes should be given cheaper mortgage rates, since current estimates of energy costs could be inaccurate by as much as £45,000 for a 25-year mortgage for an efficient home, a report launched by UK Green Building Council (UK-GBC) and the University College London’s Energy Institute has suggested.

The research suggests that mortgage lenders could “significantly improve” their calculations if they use current energy data such as the Energy Performance Certificate (EPC) rating for a property. Currently, housing-related energy costs account for 7.2% of a household’s weekly expenditure in the UK.

Richard Griffiths, Senior Policy Advisor at UK-GBC, Co-Author said: “Government wants lenders to be more responsible yet this work shows that they are currently failing to account for the likely energy costs faced by would-be borrowers. As a result lenders are potentially lending more money than buyers of inefficient properties can truly afford and vice-versa for efficient properties.

“If banks took some quite straightforward steps to address this – by including data on properties’ energy efficiency and making more accurate estimates of their likely energy bills – they would reduce the risks associated with their lending while helping to create the conditions that would see energy efficient properties rise in value compared to their inefficient counterparts.”

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