If a customer were to ask you a question about green mortgages or green home improvements, how confident would you feel to respond?
Would you be happy to have an open-ended discussion, lay out some of the big-picture considerations, and signpost to further resources and information providers? The green agenda is becoming stronger across most industries and customer questions around green properties and home energy efficiency are more likely than ever to crop up. The rising cost of living has made people more energy conscious, and the climate crisis is becoming an increasingly urgent global priority – not to mention a bigger factor to consider when buying a new home. Many customers want to reduce their carbon footprint, reduce energy bills and are becoming more environmentally conscious with their purchases – homes included!
This is what prompted AMI, the Green Finance Institute (GFI) and a host of industry experts to develop the Broker Handbook on Green Home and Retrofit Technologies. It is a first of its kind resource, gathering together useful resources about green home improvements in one place to help brokers like you. It covers a broad range of topics including consumer needs and motivations, the legislative and regulatory environment, individual technologies and retrofit solutions (and how they can work together), and the financing options available. The handbook is a starting point and a tool to support you in having better green conversations with your customers. It is officially accredited as structured CPD by the London Institute of Banking and Finance (LIBF),and will evolve over time to reflect new developments in the market and government and regulatory policy.
You can access the handbook here:
What are the benefits of green education for mortgage brokers?
Being able to support customers with energy efficiency and eco-friendly home improvements offers a fantastic opportunity to strengthen your value as an adviser and ultimately deliver better customer outcomes. But some brokers may feel the knowledge gap is too wide, uncertain and ‘unknowable’ to cross. There are also fears about needing to become an expert in topics likes solar energy or heat pumps . Green home technologies and retrofit in the UK is in its infancy and it’s a learning curve for everyone as it evolves.
As a trusted adviser, your customers are likely to want your opinion on topics within the process of homebuying but outside the mortgage arrangement itself, such as conveyancers, tax considerations and the green agenda is very much in this category.
Having the conversation might also open up avenues you had never considered before. For example, timing is a major issue in green home improvements, as sometimes mortgage terms don’t sync up with the lifecycle of green technologies or more generally with a customer’s own plans and budget requirements. If your customers are thinking about modifying their property to make it greener and more energy efficient and eco-friendly one day in the future, that’s a fantastic soft fact that could influence your recommendations around green mortgages and rates in the future. This ties in with the thrust of the Financial Conduct Authority’s (FCA’s) Consumer Duty regime. Delivering good consumer outcomes is just as much about ‘avoiding causing foreseeable harm’ as it is about ‘supporting consumers to pursue their financial objectives’.
What does the future of the green agenda hold for the mortgage industry?
The UK government recently updated its green finance strategy, which sets out its intention to make the UK a ‘net zero aligned financial centre’. The FCA is also consulting on plans to broaden its oversight of Environmental Social and Governance (ESG) factors in financial services, following a proposed amendment to the Financial Services and Markets Act that would compel the FCA and PRA to ‘have regard to the need to contribute towards achieving the Government’s target of reaching net zero greenhouse gas emissions by 2050’. Green policymaking is shifting from gentle encouragement towards demands for greater accountability and transparency from firms. Pressure both to deliver on net zero and disclose progress (or lack thereof) is going to increase from the top down. Our industry is going to have to adapt, which means green technology, education and finance will become part of the mainstream, not confined to a niche subset of products and services.
In the mortgage world, this will mean increasingly blurred distinctions between green mortgages and standard ones, with energy efficiency considerations baked into standard product features and underwriting processes. Similarly, to what was once considered ‘specialist lending’ has become the norm in some cases. To be badged as ‘green’, products will need to facilitate meaningful change – ones that simply reward customers for buying eligible eco-friendly properties are a great start, but in the future they will need to evolve to bring about even more change. For brokers, this won’t just be about catering to the needs of customers with specialist ‘green’ preferences, it will mean understanding how the climate crisis and the net zero agenda will rearrange customers’ priorities overall.
On the lender side, this market could develop very quickly, especially if new government legislation puts lenders on a deadline to clean up the EPC ratings of their back books. The Association of Mortgage Intermediaries (AMI) is making it a key priority to support brokers on their green education journey and that’s what we’re doing at PRIMIS:
Want to be part of a network that’s passionate about doing their bit for the green agenda?
Start your PRIMIS journey here:
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