European banks to offer better mortgages for efficient houses

Thirty-seven European banks today launched a pilot scheme that will see them offering cheaper mortgages to people buying an above-average energy-efficient home or renovating one to a higher standard.

Banks including BNP Paribas, ING Bank, Nordea Bank and Société Générale see the initiative as a way of mitigating their own risk as lenders because home-owners who pay smaller energy bills will find it easier to pay off their mortgages.

Eligible new-build homes will meet thresholds established by Green Building Councils across Europe: either national “nearly zero energy building” standards as required by EU climate regulations, or they will be 20% better than national standards.

Renovations will need to achieve a 30% reduction in energy demand, backed up by a new Energy Performance Certificate.

The scheme proves that investors’ demand for green buildings is growing, said the World Green Building Council (WorldGBC) Europe, a partner in the initiative along with RICS, home energy supplier E.On, universities and other organisations.

“The commitment by Europe’s leading banks to this pilot shows green building is hitting the mainstream,” said WorldGBC chief executive Terri Wills.

The banks will investigate how the scheme’s criteria can be applied to their mortgage businesses over the coming two years, with a view to offering a new generation of mortgages that incentivise energy reduction.

“Green mortgages have the potential to unlock an energy efficiency revolution by enabling homeowners to access affordable finance through which to improve their homes,” said E.On UK chief executive Michael Lewis.

The pilot follows a consultation by European Green Building Councils with hundreds of experts to develop the assessment criteria.

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