The growth of
green mortgages
In a challenging market, green mortgages offer opportunities, as a growing awareness of our environment heightens the need to offer new forms of lending. Mortgage Introducer hears from three key industry figures
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Dating back over 330 years, Barclays believes that “finance is the oxygen of the economy.” The bank’s aim is to act with transparency, expertise, empathy, and integrity, and to support people and businesses and make a real and lasting difference to the economic lives of customers and communities. It aims to be a leader in the banking profession, championing innovation and sustainability and drawing upon new ideas and technologies to help unlock opportunities. Barclays judges its success not only by commercial performance, but also by its contribution to society, saying it is at its best when its clients, customers, communities, and colleagues all progress.
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Established in 1981, Ecology Building Society started as, and remains, a group of like-minded people committed to building a more sustainable future. More than 40 years on, with a reputation for pioneering green mortgages, Ecology is still dedicated to building a greener society by providing finance for properties and projects that respect the environment and support sustainable communities. Ecology’s unique C-Change mortgages incentivise energy efficiency through mortgage pricing. For more information about Ecology’s approach,
visit ecology.co.uk
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NatWest is a relationship bank for a digital world, championing potential and helping people, families, and businesses to thrive. It does this by supporting over 19 million people, families, and businesses with a range of banking and financial services. By supporting customers at every stage of their lives, it can build long-term value, invest for growth, make a positive contribution to society, and drive sustainable returns for shareholders.
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“Lenders have a responsibility to ensure green finance or mortgages are affordable. We’ve been a long-standing supporter of a national retrofit strategy, and, as part of this, have been calling for fiscal measures such as stamp duty reforms to incentivise the creation of energy-efficient homes”
Daniel Capstick,
Ecology Building Society
In Partnership with
“Educating homeowners about home energy efficiency is hugely important – understanding, with a degree of confidence, what works for your home. I think that’s where there’s still uncertainty and we hope to be a guide for our customers”
Erika Moreira-Baker,
Barclays UK
Industry experts
Lloyd Cochrane
NatWest
Daniel Capstick
Ecology Building Society
Erika Moreira-Baker
Barclays UK
Industry experts
Leading Barclays’ sustainability strategy for mortgages, Erika Moreira-Baker’s brief includes developing products and propositions to help mortgage customers navigate the transition to low-carbon homes. She works on the bank’s net-zero strategy for mortgages, while also considering how climate change might affect customers’ homes. Moreira-Baker is originally from Brazil, and lives in London with her husband and two children.
Barclays UK
Erika Moreira-Baker
With over 20 years’ experience in green and sustainable mortgages, Daniel is an expert in his field in both commercial and residential sustainable lending. Starting his career in mortgage operations, moving into the product team has given him a unique insight into meeting the needs of Ecology’s members, supporting the customer journey, and designing commercially successful, innovative financing solutions, which help tackle climate change, for sustainable construction and retrofitting of the UK’s housing stock.
Ecology Building Society
Daniel Capstick
For more than 20 years, Lloyd Cochrane has worked in UK Financial Services, largely focussed on residential mortgages. For the last nine years he has been head of mortgages at NatWest, leading the growth of the business from around £95bn to around £170bn of assets over the period, from number six to number three in the market, and working as part of the team to transform the experience for customers. In the last two years he has also led the NatWest housing climate strategy, creating the proposition to support NatWest mortgage customers and building a broader role for the business.
NatWest
Lloyd Cochrane
Lloyd Cochrane
NatWest
Daniel Capstick
Ecology Building Society
Erika Moreira-Baker
Barclays UK
Industry experts
Leading Barclays’ sustainability strategy for mortgages, Erika Moreira-Baker’s brief includes developing products and propositions to help mortgage customers navigate the transition to low-carbon homes. She works on the bank’s net-zero strategy for mortgages, while also considering how climate change might affect customers’ homes. Moreira-Baker is originally from Brazil, and lives in London with her husband and two children.
Barclays UK
Erika Moreira-Baker
With over 20 years’ experience in green and sustainable mortgages, Daniel is an expert in his field in both commercial and residential sustainable lending. Starting his career in mortgage operations, moving into the product team has given him a unique insight into meeting the needs of Ecology’s members, supporting the customer journey, and designing commercially successful, innovative financing solutions, which help tackle climate change, for sustainable construction and retrofitting of the UK’s housing stock.
Ecology Building Society
Daniel Capstick
For more than 20 years, Lloyd Cochrane has worked in UK Financial Services, largely focussed on residential mortgages. For the last nine years he has been head of mortgages at NatWest, leading the growth of the business from around £95bn to around £170bn of assets over the period, from number six to number three in the market, and working as part of the team to transform the experience for customers. In the last two years he has also led the NatWest housing climate strategy, creating the proposition to support NatWest mortgage customers and building a broader role for the business.
NatWest
Lloyd Cochrane
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Erika Moreira-Baker
Barclays UK
Daniel Capstick
Ecology Building Society
Lloyd Cochrane
NatWest
For more than 20 years, Lloyd Cochrane has worked in UK Financial Services, largely focussed on residential mortgages. For the last nine years he has been head of mortgages at NatWest, leading the growth of the business from around £95bn to around £170bn of assets over the period, from number six to number three in the market, and working as part of the team to transform the experience for customers. In the last two years he has also led the NatWest housing climate strategy, creating the proposition to support NatWest mortgage customers and building a broader role for the business.
NatWest
Lloyd Cochrane
With over 20 years’ experience in green and sustainable mortgages, Daniel is an expert in his field in both commercial and residential sustainable lending. Starting his career in mortgage operations, moving into the product team has given him a unique insight into meeting the needs of Ecology’s members, supporting the customer journey, and designing commercially successful, innovative financing solutions, which help tackle climate change, for sustainable construction and retrofitting of the UK’s housing stock.
Ecology Building Society
Daniel Capstick
Leading Barclays’ sustainability strategy for mortgages, Erika Moreira-Baker’s brief includes developing products and propositions to help mortgage customers navigate the transition to low-carbon homes. She works on the bank’s net-zero strategy for mortgages, while also considering how climate change might affect customers’ homes. Moreira-Baker is originally from Brazil, and lives in London with her husband and two children.
Barclays UK
Erika Moreira-Baker
“The energy crisis has heightened people’s consciousness, but there is a huge difference between being aware and actually doing something. That’s why we’re sharing as much information as possible”
Lloyd Cochrane,
NatWest
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Copyright © 1996-2023 KM Business Information UK Ltd.
1 April 2023
The date on which it will become unlawful
to continue to let commercial properties with an EPC rating below an E
EPC
Energy performance certificate – a document issued by an assessor that shows information about the energy efficiency of
a property
The year when rented properties will begin to need a certification rating of C or above for new tenancies
2025
The year by which landlords with existing tenancies will have to achieve at least a C rating for their properties
2028
2050
The year by which the UK government hopes to achieve its net-zero emissions target,
aided by new
EPC regulations
Capstick highlights the growth of the off-site construction market, which he says offers an opportunity to quickly build affordable, higher-quality, energy-efficient properties with greater precision and lighter carbon impact.
“We're the first UK lender to team up with off-site manufacturers to develop a mortgage product to help finance modular construction,” he enthuses. “This enables us to make upfront payments at specific stages of the build, to pay the manufacturer while the modular panels are being made. We expect to partner with more manufacturers in the coming months.
“Lenders have a responsibility to ensure green finance or mortgages are affordable. We've been a long-standing supporter of a national retrofit strategy, and, as part of this, have been calling for fiscal measures such as stamp duty reforms to incentivise the creation of energy-efficient homes. Making a home more energy-efficient doesn't have to be expensive. We support a fabric-first approach, which starts with air-tightness insulation in the walls, roof, and floor.”
“We're really looking forward to partnering with brokers, working together to achieve that.”
Ecology Building Society has been in the market a long time, providing sustainable mortgages for over 40 years.
“Green mortgages, or sustainable green finance, is inherent in our DNA,” says Ecology Building Society’s mortgage product manager, Daniel Capstick, with some pride. “Anything that we lend has to have a positive environmental or social impact. The global climate crisis is really focusing lenders’ minds on offering green mortgages to improve the energy efficiency of housing stock. About 85 per cent of UK homes use gas for heating, which has a huge impact on carbon emissions.” He elaborates, “Retrofitting existing properties – installing insulation to retain heat, in conjunction with what we call low-carbon heating technologies and renewable technologies, is a major challenge – Our C-Change Mortgage discounts are transformational because they incentivise the construction and renovation of energy-efficient homes.
We were also the first lender to offer a cash-back option to support the installation of air-source and ground-source heat pumps.”
Moreira-Baker continues, “Our research showed that the majority of homeowners hoped to make retrofit improvements in the next five years, but three-quarters said they couldn't afford them. We launched our Greener Home reward, with up to a £2,000 reward for making energy-efficiency improvements.
GREEN MORTGAGES are buzzwords in the current UK mortgage market, as a global climate crisis and the rising cost of energy focus the public’s attention on energy-efficient homes like never before.
Financial institutions are waking up to the imperative action of offering lending products that take account of a planet that seems ever more fragile under the stress and strain of modern life.
Yes, there are commercial and corporate kudos for embracing green lending, but behind all of these corporate brands are human beings with their own concerns about the future of the world they’re leaving to those who follow in their footsteps.
By the end of 2022, Barclays UK had lent over £2.6bn on over 11,000 green mortgages.
“We've seen a steep increase in the number of lenders offering green mortgage products in the last four to five years, since we launched our green home mortgage in 2018,” says Ericka Moreira-Baker, Barclays’ senior product manager and sustainability lead for mortgages.
“We reward customers purchasing an energy-efficient, new-build home with a discount on our interest rate. In early 2022, we expanded our green home mortgages to buy-to-let, recognising that energy efficiency is an increasingly important issue for landlords.”
Capstick emphasises that Ecology Building Society’s relationship with brokers is important.
“They're a strong force to accelerate the “take up” of remortgages and are well placed to really push the green mortgages,” he reasons. “But they're only as good as the products that are in the market, which are often aimed at new homes rather than the transition of the UK’s existing housing stock to either energy-efficient or low-carbon heating technology. That's the real gap in the market.”
He concludes confidently, “In five or ten years’ time, I think green mortgages will be mainstream. It's an absolutely critical market.”
Lending to 1.2 million UK homeowners, NatWest Group Mortgages sees green mortgages as a key area of its business.
“We set out to be the leading bank on climate change and helping the green transition in housing, with an ambition that half of our customers’ properties would be at least C rated by 2030 – the first UK bank to do that,” notes Lloyd Cochrane, NatWest’s head of proposition and protection.
“We've got the leakiest, least energy-efficient homes in Europe. Helping support customers to improve those homes is a massive undertaking. We are close to finishing retrofitting nine NatWest and British Gas customers’ homes, spending a significant amount of money, to learn how hard it is to go through that process and make it easier for customers.”
He explains, “We established a coalition with Shelter, Citizens Advice, British Gas, and Worcester Bosch that looked at how difficult it was for customers to retrofit their homes. It's a really complex thing to do, so we've released some reports that recommend to government things that can make it easier – for example, a stamp duty rebate if you make energy-efficiency improvements.
“We have a green mortgage suite, offering a discount if you're buying or remortgaging an A-rated or B-rated property, but the opportunity where we're most focused now is the retrofit of existing homes. Before the end of this year, we’ll launch a product whereby if you're an existing mortgage customer, we will lend you the additional borrowing to upgrade your home, at a discount.”
Cochrane adds, “NatWest has also built a platform, the Home Energy Plan, where homeowners can enter their postcode and get information on ways in which they can save money on their bills and make energy-efficiency improvements. We have a feature on our app, which is a carbon tracker, based on a customer’s spend data, with tips on how to reduce your carbon footprint.
“We started a green home attitude tracker that measures how aware customers are. The energy crisis has heightened people's
consciousness, but there is a huge difference between being aware and actually doing something. That's why we're sharing as much information as possible.”
He sums up, “If you've got an A-rated or a B-rated property, you should have a green mortgage – they're proving very popular and will grow. I think the real area of growth will be funding for retrofit – that's where the majority of the customer support is needed.”
The lowdown on EPCs
“Educating homeowners about home energy efficiency is hugely important – understanding, with a degree of confidence, what works for your home. I think that's where there's still uncertainty, and we hope to be a guide for our customers, with a roadmap of the steps they need to take. And there's a role that brokers can play as well in mapping out that journey.
“Brokers are now more aware of green mortgages and are actively seeking those deals for their customers.”
Moreira-Baker observes, “We're all on a learning journey. We hope as a lender that we can help brokers, with education and with the tools and products that they need to have those important conversations.
“My expectation for the UK housing sector is that energy efficiency will be an integral part of the homebuying or home refinancing process, in the same way that people value kerb appeal. We're going to see more innovation, more education, and more products and services available to our customers.
A learning journey
The broker relationship
How green is your home?
2/3
Proportion of those surveyed by Mortgage Advice Bureau who had no idea of the government’s EPC target
Percentage of people in the same survey – almost two in three – who said they did not know their home’s EPC rating
64%
1/3
Proportion of those who did know their rating who were inclined to make changes because they had seen the effect raising the EPC had on their friends’ or families’ bills.
Percentage of those surveyed who had spoken
with an
12%
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Capstick highlights the growth of the off-site construction market, which he says offers an opportunity to quickly build affordable, higher-quality, energy-efficient properties with greater precision and lighter carbon impact.
“We're the first UK lender to team up with off-site manufacturers to develop a mortgage product to help finance modular construction,” he enthuses. “This enables us to make upfront payments at specific stages of the build, to pay the manufacturer while the modular panels are being made. We expect to partner with more manufacturers in the coming months.
“Lenders have a responsibility to ensure green finance or mortgages are affordable. We've been a long-standing supporter of a national retrofit strategy, and, as part of this, have been calling for fiscal measures such as stamp duty reforms to incentivise the creation of energy-efficient homes. Making a home more energy-efficient doesn't have to be expensive. We support a fabric-first approach, which starts with air-tightness insulation in the walls, roof, and floor.”
Moreira-Baker continues, “Our research showed that the majority of homeowners hoped to make retrofit improvements in the next five years, but three-quarters said they couldn't afford them. We launched our Greener Home reward, with up to a £2,000 reward for making energy-efficiency improvements.
“Educating homeowners about home energy efficiency is hugely important – understanding, with a degree of confidence, what works for your home. I think that's where there's still uncertainty, and we hope to be a guide for our customers, with a roadmap of the steps they need to take. And there's a role that brokers can play as well in mapping out that journey.
“Brokers are now more aware of green mortgages and are actively seeking those deals for their customers.”
adviser about in EPC
Percentage of those surveyed who had spoken
with an
“The energy crisis has heightened people’s consciousness, but there is a huge difference between being aware and actually doing something. That’s why we’re sharing as much information as possible”
Lloyd Cochrane,
NatWest
Copyright © 1996-2023 KM Business Information UK Ltd.
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“The energy crisis has heightened people’s consciousness, but there is a huge difference between being aware and actually doing something. That’s why we’re sharing as much information as possible”
Lloyd Cochrane,
NatWest
Copyright © 1996-2023 KM Business Information UK Ltd.
RSS
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