Green mortgages gain ground despite awareness gaps

Despite steady growth, brokers face an education challenge as consumers remain largely unaware of sustainable lending options

THE GREEN lending revolution is quietly reshaping Australia’s mortgage market, yet most borrowers don’t know it exists. While lenders report consistent growth in sustainable finance products, a significant disconnect persists between availability and awareness, creating both challenges and opportunities for mortgage brokers. This disconnect becomes more pressing when considering that Australian homes are responsible for around 24% of the country’s electricity use and 11% of its greenhouse gas emissions, with most existing homes rating less than three stars out of 10 for energy efficiency, according to the Home Energy Ratings Disclosure Framework 2024. “Over the past couple of years, we’ve definitely seen more borrowers and brokers leaning into green lending,” says Jake Sanders, head of third party at Firstmac. “Rising energy prices have been a big motivator, as people look for ways to cut their bills, but there’s also a clear shift in values.” This reflects a market driven by both financial necessity and changing consumer priorities.

Today’s green lending products extend far beyond simple rate discounts. Gateway’s flagship Green Plus Home Loan requires properties to achieve either a certified above-seven-stars NatHERS rating or a Green Star Home certification from the Green Building Council Australia (GBCA). This qualification unlocks at least a 0.25% rate reduction for the loan’s entire term. The bank has pushed boundaries in terms of property types and investor segments, such as apartments. Energy used by common property in apartments can account for up to 60% of the total building’s energy consumption. “Gateway was also one of the first lenders to offer these products for apartments and recently collaborated with the GBCA on their Rise and Thrive report on sustainable apartments,” Drummond says. The institution also pioneered green lending solutions for investment properties, recognising that sustainable finance shouldn’t be limited to owner-occupiers. Beyond home loans, the product suite includes Eco Personal Loans for energy upgrades and specialised electric vehicle financing. This comprehensive approach reflects growing recognition that sustainable finance must address multiple aspects of household energy consumption. “At Firstmac, we’ve designed our green products to reward customers who make sustainable choices,” says Sanders. “For example, our Electric Car Loan gives borrowers up to 0.5% interest rate discount when they purchase an EV, making the switch to clean transport more affordable.” Such incentives demonstrate how lenders are structuring products to encourage sustainable behaviour. The push towards green lending reflects broader issues with Australia’s housing stock. Most Australian homes are too cold in winter and too hot in summer, with poor thermal performance forcing residents to rely heavily on artificial heating and cooling. CSIRO research shows that more than nine million existing homes don’t meet the seven-star standard.

solar power systems command an average price premium of 2.7% or $23,100 compared to similar properties without such installations.

of Australia’s greenhouse gases are produced by households

Households’ impact on greenhouse gas emissions

“Our Green Home Loan offers a 0.45% discount for five years to borrowers whose property achieves a NatHERS rating of 7.5 stars or higher – much more efficient than the average home,” Sanders explains. “And our Solar Home Loan gives customers a lower rate if they install solar panels, with the option to roll the system’s cost into their mortgage.” He notes that in most cases the energy savings outweigh the repayment costs, making these products both environmentally and financially beneficial. These improvements often lead to higher valuations, with data from property data provider Cotality showing that homes equipped with

Gateway Bank is a customer-owned bank with its head office in Sydney, which has been serving members for over 70 years. Today Gateway supports over 30,000 members and offers a range of award-winning products, from transactional banking to savings accounts, home loans, commercial lending and consumer loans. As part of Gateway’s ‘Pocket & Planet’ purpose, the bank has been a leader in green lending, offering wide range of innovative, award-winning discounted Green Home Loans and Eco Personal Loans.

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Brisbane-based Firstmac Limited is an independently owned Australian financial services provider with more than 46 years’ experience in home and investment property loans. With its advances in technology, Firstmac provides brokers with streamlined business processes, an innovative product suite and a total commitment to service. Firstmac has written more than 130,000 home loans and has $21 billion in home loans under management. Firstmac also has a growing auto finance business with a current portfolio of $1 billion. It is a premier sponsor and Charity Partner of the Brisbane Broncos.

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Despite product availability and streamlined processes, consumer awareness remains problematic. These awareness deficits present particular challenges given underlying market barriers to energy-efficiency improvements. Many consumers lack technical knowledge about energy performance costs and benefits, while others face affordability constraints or split-incentive problems where landlords have little motivation to invest in upgrades that primarily benefit tenants. Gateway’s research across three waves reveals significant gaps in market understanding, with only 23% of respondents identifying brokers as a source for green home loans – well below the channel’s overall market share of around 75% of new residential loan originations.

“The feedback on our green home and car loans has been positive, especially around accessibility and value. Brokers like having a straightforward, competitively priced product to offer clients”

Jake Sanders, Firstmac

Efficiency energy rating concept. Sustainable development and eco house. Ecological house with low consumption on renovation with insulation.

In Partnership with

finance to co-financiers to increase sustainability across the housing sector. “The increase in lenders entering the energy-upgrade category with the backing of the CEFC Home Energy Upgrade Fund has helped increase demand and grow the category,” Drummond says. One of those lenders is Firstmac, which recently secured $108.5 million in CEFC backing as part of an Australian-first $750 million green mortgage-backed securitisation. The landmark deal, which also attracted $637.5 million from Japanese investment bank Norinchukin, enables Firstmac to offer $230 million in discounted green home loan finance to borrowers with properties meeting or exceeding seven-star Nationwide House Energy Rating Scheme (NatHERS) ratings. “Australians are becoming more conscious of sustainability, and we’re hearing more questions about financing solar, batteries and energy-efficient homes,” Sanders adds. “Government policies and incentives are helping, but at the heart of it, customers want options that align with their lifestyle and their values – and they don’t want to pay a premium for doing the right thing.”

“The research also highlighted that consumers felt applying for a green home loan would be difficult, especially if they were offered at a reduced rate,” Drummond says. This perception creates a self-fulfilling prophecy where borrowers avoid products they assume are complex or restrictive. The awareness gap extends beyond product existence to channel understanding. “The general lack of awareness of green home loans provides the greatest barrier, as consumers believe them to be hard to obtain and that lenders will make them jump through hoops to get one,” Drummond says. Sanders sees the same dynamics at play and stresses that education is the biggest opportunity to help brokers and customers understand that green lending is both accessible and worthwhile. “The main barriers we see are awareness and misconceptions,” he says. “Many borrowers don’t realise these products exist, or they assume green loans must be more expensive or require major renovations. In reality, small upgrades like solar panels can qualify, and the pricing is highly competitive.”

“We’ve continued to see steady growth in the uptake of green lending in the last few years as cost of living and energy pressures have focused the minds of consumers on becoming more energy efficient”

Zeb Drummond, Gateway Bank

Gateway Bank has witnessed related trends first-hand over nearly five years in the green lending space. “We’ve continued to see steady growth in the uptake of green lending in the last few years as cost of living and energy pressures have focused the minds of consumers on becoming more energy efficient,” says Zeb Drummond, chief operating officer at Gateway. The bank’s experience reflects broader market conditions, with green lending now representing approximately 10% of its home loan portfolio. Recently, this growth has been driven by an increase in competition driven by the Australian government-owned Clean Energy Finance Corporation (CEFC) through its Household Energy Upgrades Fund (HEUF). The $1 billion fund provides discounted

Industry experts

Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

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Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

A quiet growth story

Zeb Drummond

Gateway Bank

Jake Sanders

Firstmac

Jake Sanders joined Firstmac in January 2007 and has been head of third party sales since 2017. Over the past 25 years, he has worked in various roles in banking and finance, including loan approvals, credit control, documentation, settlements and sales. Prior to joining Firstmac, Sanders spent five years at National Australia Bank, followed by roles at a finance and conveyancing firm where he obtained his Advanced Diploma of Conveyancing, at Gadens law firm as national business development manager, and at Capital First Financial Services as a senior sales manager. Sanders is a keen surfer and enjoys a round of golf.

Firstmac

Jake Sanders

Zeb Drummond has 20 years of banking experience at Westpac and Gateway. As chief operating officer at Gateway, he is responsible for the bank’s direct and third party sales channels as well as its lending and transactional teams. He manages relationships with Gateway’s broker partners and aggregator groups and is a strong advocate of the broker channel. Drummond is a key part of Gateway’s executive team driving the bank’s strategy and execution.

Gateway Bank

Zeb Drummond

Product sophistication

Published 27 Oct 2025

11%*

*Includes emissions from source fuels such as coal and gas for electricity generation, as well as direct use of gas and wood heaters for heating and cooking

Source: Australian Government Home Energy Ratings Disclosure Framework 2024, Version 2

Source: CSIRO Energy Rating – National Overview

of existing Australian homes fall below the minimum energy-efficiency requirement for new houses of 7 stars (out of 10)

~90%

A significant sustainability challenge

Despite involving additional certification requirements, green loan processing at Gateway maintains the same two-day conditional approval time frame as standard products. “The only difference for a green home loan is the requirement to show appropriate evidence of energy-efficiency certification or evidence of appropriate energy-efficiency features,” Drummond explains. This documentation can be provided any time before loan settlement, minimising disruption to borrowers’ timelines. For personal loans supporting energy upgrades, the bank manages disbursement directly to suppliers or requires purchase evidence, ensuring funds reach their intended purpose. While green lending involves additional steps, experienced borrowers navigate them smoothly. “Consumers with genuine energy-efficient features and certifications are well versed in the process, and it has little or no impact on processing times,” Drummond says. At Firstmac, Sanders says, “We’ve kept the process as simple as possible because we know extra red tape can put people off. For a Green Home Loan, the only additional requirement is a NatHERS certificate showing the property’s energy rating. For our EV loan, it’s as simple as confirming that the vehicle is electric.” The approach prioritises accessibility over complexity. “The feedback on our green home and car loans has been positive, especially around accessibility and value,” he says. “Brokers like having a straightforward, competitively priced product to offer clients, while customers appreciate that going ‘green’ doesn’t mean paying more or dealing with added complexity – it’s a practical way to finance solar, batteries or EVs.”

Streamlined processes

The awareness challenge

This awareness deficit represents a significant opportunity for mortgage brokers who can bridge the knowledge gap. Gateway supports brokers through regular training sessions, workshops, factsheets and practical tools, including case studies and savings scenarios that demonstrate long-term value to clients. The bank’s research suggests brokers are underutilising their position in the green lending market. With consumer awareness low and misconceptions high, informed brokers can provide substantial value by educating clients about available options and dispelling complexity concerns. Firstmac also prioritises education. “Broker education is a big focus for us,” says Sanders. “We run regular training sessions and webinars – both online and in person – to build confidence around green lending. Our monthly webinar series has been especially popular, covering everything from one-touch approvals to the ins and outs of our green range.” This educational approach helps brokers feel more comfortable about bringing up green finance options with clients. Gateway hasn’t observed notable demographic or geographic trends in green lending uptake, suggesting broad market applicability rather than niche appeal. However, green loans typically involve higher amounts than standard home loans, indicating borrowers are making substantial property improvements.

Broker opportunity

Current green lending remains concentrated among mutual banks and non-bank lenders, but this is expected to change. “At the moment, green lending is largely funded through mutuals and non-bank lenders,” Drummond says. “As larger lenders come into the market, we will see increased consumer awareness and demand in the market, driving continued growth in the sector.” Government policy will likely accelerate this trend. “It will be interesting to see what state and federal incentives are rolled out in coming years to support the ongoing energy transition. These incentives will increase awareness and drive demand amongst consumers,” Drummond says. The Clean Energy Finance Corporation’s involvement through HEUF has already demonstrated how government backing can stimulate

Market evolution

market growth by reducing funding costs and encouraging lender participation. Sanders says, “We see green lending becoming a mainstream part of the finance conversation in Australia as energy costs rise and government policy continues to shift. At Firstmac, we’re focused on making these products simple, good value and accessible.”

For Gateway, green lending aligns with the bank’s broader corporate purpose beyond profit generation. “Gateway’s Pocket & Planet purpose underpins our commitment to products that deliver both financial and environmental benefits,” Drummond says. This positioning reflects growing recognition that sustainable finance represents more than a product category – it’s becoming integral to future housing finance. “Green lending is not just a growth area but a central part of the future of home finance, and Gateway is proud to continue leading the way,” Drummond concludes. Sanders emphasises the opportunities ahead for brokers, noting that this shift means they have “more opportunities to offer clients finance that makes both financial and environmental sense, while positioning themselves at the forefront of a growing market”. The evolution suggests that brokers who develop expertise in green lending products may gain competitive advantage as awareness grows and major lenders enter the market. With energy costs continuing to rise and government policy supporting the transition, the question isn’t whether green lending will expand but how quickly brokers will adapt to capitalise on the opportunity.

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