Interest charge

Second-tier green mortgages set to become ‘more mainstream’ – analysis

Earlier this week, West One Loans launched its second tier green mortgage for property owners with an Energy Performance Certificate (EPC) rating between A and C in what it called an industry first.

Rates start at 5.29%, which he said was his lowest ever rate for a second mortgage.

Brokers said they expect the number of green mortgage products to increase overall, which includes second mortgages.

Gerard Boon, managing partner at Boon Brokers, said more green second charges are entering the market, citing West One’s offer, which incentivizes landlords to improve EPC ratings by offering interest rates below its ranges. standard.

“If that translates into lower interest rates, there will definitely be a demand there for these products. With the emergence of these second-load green products, offering attractive interest rates, that’s a good idea for existing owners with second charges to contact their broker to see if a change is in their best interest, he said.

He added that he expects this type of market offering to become “more prevalent in the second-charge market in the months and years to come.”

However, Boon warned that additional advances are generally cheaper than second charges, so he expects these to be more in demand, but that could change if existing lenders cannot provide additional advances.

He continued: “At the moment very few clients are aware of green mortgages – it is normally a product that we as a broker would recommend if it is suitable. However, as consumers begin to familiarize themselves with the product knowing that they might be able to get a better interest rate, we expect customers to demand it in the future,” said he declared.

“The green mortgage revolution is in full swing”

Dominik Lipnick, director of Your Mortgage Decisions, said there is no doubt that green mortgages are here to stay and more lenders will offer them in the future.

He said: “It makes sense that the second charging market will follow suit and offer green products, as more energy-efficient homes offer better security to the lender and encourage borrowers to insulate their homes.”

He added that the benefits of green products include lower rates and the lender has better security and the borrower will spend less on energy costs.

“The real downside, apart from a few products, is that many older homes just don’t qualify and with the cost of living crisis fewer people have the spare funds to ensure their properties get the A or B rating required,” he said.

He added that consumer awareness of green mortgages was low as there had been “very little education or advertising around these products”, so “good independent advice is essential”.

Matthew Fleming-Duffy, director of Cherry Mortgage and Finance, said the “green mortgage revolution is in full swing” with more residential, buy-to-let, life mortgage and second charge options becoming available.

He said: “Although this type of loan solution is still under the radar of most consumers, it is only a matter of time before it becomes part of the national psyche as the cost of life and energy prices are rising.”

The second green charge is very “niche”

Lewis Shaw, founder and consultant at Shaw Financial Services, said efforts to decarbonize the environment were “positive”, but expressed concern that second-charge green mortgages were “so niche that I can’t not imagine that someone would look for them”.

He said: “If lenders want to advance a green agenda, they should start by divesting from the fossil fuel industry. If they really want to help, they should start making sure new build developers put solar panels on every new home and meet the building standards they’re supposed to, rather than building cardboard boxes that have more heat holes than a slice of edam. .”