David Geale has spoken on FCA’s view of green mortgages. He said that every part of the housing chain has a role to play, and that lenders are risking missing their decarbonisation targets if they do not evolve in their support to homeowner to enhance energy efficiency. As a result, he says brokers are likely to see an increase in green mortgage products and innovation and that those brokers will therefore have a key role to play in helping borrowers to understand the products. By “green mortgages”, FCA means mortgages that include an incentive for people either to buy an energy-efficient property or to improve the energy efficiency of an existing property – which will usually incentivise customers by a discount to a fixed rate, or cashback when the improvement has been completed. He noted that the Consumer Duty will impact on ESG products, so that the more specific a consumer is about their requirements, the more specific advice they receive will need to be.
He also warned lenders not to adopt a blinkered approach – for instance, lending only on new homes that are already energy efficient may “green” an organisation’s balance sheet, but will not help with the overall goal of decarbonising the UK housing stock. Additionally, incentives and products may run ahead of consumer demand – for example, customers need time to decide whether to install solar panels. So balancing all the priorities and risks is critical.