The Nationwide Building Society is chairing research into whether homebuyers of energy efficient homes could potentially access larger mortgages due to saving money on fuel bills.
The study is being rolled out by the LENDERS project (Levering Economics for New Drivers to Energy Reduction & Sustainability), chaired by Nationwide. It aims to help reduce carbon emissions and aid responsible borrowing by more accurately estimating domestic fuel costs as part of the mortgage application process.
The UK’s largest building society is currently the only UK high street lender to offer preferential borrowing terms to those undertaking energy efficient improvements.
The society’s Green Further Advance allows existing mortgage customers to borrow between £5,000 and £20,000 in order to install approved energy efficiency measures such as cavity wall insulation, rated boiler installation and solar panels. Customers can then benefit from a 0.25 percentage point rate reduction on Nationwide’s existing range of two-year fixed rate and tracker further advance deals.
LENDERS comprises a number of diverse groups, including Principality Building Society, UK Green Building Council, Constructing Excellence in Wales, BRE, Energy Saving Trust, Arup and University College London (UCL).
Specifically, it is hoped the research will enable better understanding of how Energy Performance Certificates (EPC), required on every home for sale, could be used to assess whether those with energy efficient homes have lower costs, and therefore could potentially afford to borrow more on their mortgage.
A consumer survey has been launched to gather the required data for the study. Once completed, the results could potentially be used to influence affordability calculations and borrowing limits across the industry.
Andrew Baddeley-Chappell, head of mortgage policy at Nationwide, said: “Against a background of rising house prices and energy bills, the new survey provides an opportunity to scrutinise energy efficiency and its potential to influence property choices and lending practices.
“Depending on the outcome of the survey, the results could show lenders across the industry that smaller fuel costs allow more to be borrowed on the mortgage and might encourage buyers towards more efficient homes.”
