Research shows that Britons care about climate change, and what we can do about it.
- According to Ipsos MORI in 2019, 85% of Britons are “concerned” about climate change, and 52% are “very concerned”.
- And climate change starts at home, literally: homes account for 15-20% of all UK’s total carbon emissions. The gas we use to heat our homes is mainly responsible – it’s a fossil fuel which releases carbon into the atmosphere when burned.
- Mortgage industry research in 2020 found that one in five homeowners would be willing to pay an extra £100 a month for their mortgage if it helped to lower their carbon footprint.
Fortunately, that’s not necessary.
The government is giving funding support to lower-cost green mortgages as part of its Green Finance Strategy to become a net zero emissions economy by 2050. The aim is to improve the energy efficiency of the 17 million homes in the UK with Energy Performance Certificate ratings (EPCs) lower than band C.
What is an EPC rating?
An Energy Performance Certificate (EPC) rates the energy efficiency of a building. It’s based on data about factors such as the building materials used, the heating systems and insulation. Home owners pay for an inspection by an accredited energy assessor, and the data is entered into a government-approved software to generate the EPC.
An EPC is required when a building is constructed, sold or let, and is valid for 10 years. Domestic EPCs are banded from “A” to “G”, where “A” is the most energy-efficient in terms of likely fuel costs and CO2 emissions.
You can check the EPC for your own home, or a property you’re interested in buying, by typing its postcode into the national register of EPCs.
What NatWest is offering
In October 2020 NatWest launched a range of green mortgages offering discounted rates to mortgage applicants buying properties with the highest energy efficiency ratings of A or B.
Their own research shows that 70% of their customers are concerned about the climate but unsure how to reduce their carbon footprint.
- The range of new mortgages include deals fixed for two and five years
- Deposits required range from a low 15%, up to 40% to get the most advantageous rates
- The fees for all of them are set at £995, and they all offer £250 cashbacks
Good news for your monthly bills
This is good news for you as a mortgage-holder concerned about your monthly outgoings.
You save on your monthly mortgage payments. And you also save on energy bills when you’re living in a top EPC-rated home. Homes with A or B-rated EPCs spend an average of £368 a year on their energy bills, compared with the energy costs of most homes which are D-rated, which spend £1,076 a year.
And it works to encourage house builders, and home-sellers considering making energy-saving home improvements, to aim for the highest energy-saving EPC ratings.
So, how green is NatWest?
You may also be motivated by wider environmental concerns, and want your monthly mortgage payments to support environmentally sustainable investments. Or at least not be supporting fossil fuel industries.
Since the Paris Agreement on climate change was signed in 2015 the RBS Group (including NatWest) has invested over $4 billion in fossil fuels. (RBS is 62% publicly-owned.)
In February 2020 the NatWest Group rebranded, with the new chief executive saying that part of the thinking behind the move was to increase the bank’s environmental ambitions.
- In July 2020 NatWest Group became the first major UK bank to sign up to the Partnership for Carbon Accounting Financials (PCAF)
- The bank has committed to halving the climate-related impact of its loans and investments within a decade
- NatWest will halt all coal financing by 2030
- By 2021 it will stop lending and underwriting to companies with more than 15% of their activities relating to coal, unless they produce a “credible” transition plan in line with the Paris Agreement
- By the end of 2021 oil and gas corporations will be removed from its portfolios, unless they are planning to dramatically change their business models
What kind of home can you buy with a green mortgage?
Your choice is probably going to be limited to new-build properties.
- You may be lucky enough to find an older home that has had extensive insulation work, solar installation or other energy improvements. But at the end of 2018, fewer than one in a thousand existing dwellings (older homes) in England and Wales had an EPC A-rating. Only 2% scored the necessary B-rating to qualify for a green mortgage.
- By contrast, 83% of new-builds were B-rated, and 1% were A-rated.
The government has pledged to upgrade all home in the UK to B and C standard by 2035.