Lenders urged to review mortgage criteria to reflect ...

Mortgage lending criteria and products are failing to keep up with more energy-efficient homebuilding techniques, it has been claimed.

The Home Builders Federation (HBF) is urging the Government to work with lenders to establish a proper market for green mortgages.

It comes as a report by the trade body suggests energy and thermal efficient new housing stock is reducing the UK’s annual carbon emissions by 500,000 tonnes and helping consumers combat rising household costs.

But most mortgage affordability assessments are still based on the same energy bill assumptions, despite Energy Performance Certificates (EPC) likely to be different for each property.
The HBF said lenders will therefore apply the same assumed monthly expenditure to households regardless of the performance of the property they are purchasing.

This is a missed opportunity to offer improved mortgage deals that incentivise environmentally conscious and long-term money-saving buying decisions, which would also support the next generation to realise their homeownership ambitions, the HBF said.

Neil Jefferson, managing director at HBF, said: “The action industry is taking to continually improve the energy and carbon efficiency of new homes is contributing significantly towards Government’s net zero action plan and helping to ease the mounting pressures on household incomes across the country.

“As mortgage affordability gets tougher, rental costs increase and the country’s need for homes grows increasingly desperate, lenders and Government must review affordability assessments in consideration of these numbers to support more people to get onto the housing ladder.

“Meanwhile, if Government is serious about delivering the number of homes the country needs and achieving against its environmental commitments, nationwide investment in skills programmes, retraining and apprenticeships is essential.”