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Guest blog: Green Mortgages, the path ahead

Article by Rachael Hunnisett, Green Mortgage Campaign Lead, Green Finance Institute.

By Rachael Hunnisett, Green Mortgage Campaign Lead, Green Finance Institute.

First published in Society Matters magazine.

You will likely be no stranger to the term 'green mortgage', with the number of green mortgage products increasing from 3 in 2017 to 51 in 2022. But what is a green mortgage?

In my work leading the Green Mortgage Campaign at the GFI, I have asked this question across the mortgage  industry.

It may not be a surprise to learn that I received more answers on what a green mortgage isn’t, rather than what  it actually is. Through campaigning it is our mission at the Green Finance Institute (GFI) to enable a scalable  green mortgage market, which plays a significant role in improving the energy efficiency of UK homes – which  will be vital given almost 20% of carbon emissions come from our homes.[1] We are in the design and scoping phase of the campaign, so I thought I’d share my early thinking on the direction of travel:

Collaboration is key when it comes to green mortgages, unlike many instances in product design. We could liken it to putting the cart before the horse as usually in product design you start with consumer demand and build out from there. We are in a unique environment where we have a brief window of time before consumer  demand gains pace.  This differs from the usual product design process. It is a unique mind who can think of a solution to a problem their customer doesn’t realise they have yet. Thankfully, there are plenty of unique and  wonderful minds creating solutions. Our Broker’s Handbook – produced in collaboration with leading industry experts, including the BSA – proves that working in partnership often drives better results.

Continuous evolution is needed. I’m often  asked about the effectiveness of cashback or discounted products this can be quite a polarising question. My view is that in the current market, we are stood with lots of options when it comes to the next iteration of green products, from retrofit solutions to usage linked innovation – there are plenty of ideas. It’s important that we use this opportunity to put consumer choice at the heart of  product design. While the exact needs of the consumer are being established, product design should continue  to evolve with these potentially changing needs.Cashback and discounted rate products are an important first step on the road to net zero, with more innovation to follow...

Customer choice. There are lots of ways to provide financial solutions which unlock the retrofit market. For  example, unsecured loans and property-linked finance are examples of scalable mechanisms which can deliver results in this space. Green mortgages provide a key opportunity to support and encourage retrofitting at scale,  while continuing to do what Building Societies do particularly well, keeping their members heart of everything  they do. At the Green Finance Institute, through our connections with industry, finance and government, we  continue to work with the market to ensure longevity and scalability, focusing on a solutions based approach to provide tools and insight which support market growth. Green mortgages provide an exciting path forward for  our industry on the road to secure a net-zero future.

[1] 1 2021 UK greenhouse gas emissions, provisional figures 4 (publishing.service.gov.uk)

To find out more:

Visit the GFI Website
 
The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.

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