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BRE conducts study on green mortgage lending

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BRE and a partnership including mortgage lenders, building industry experts, green energy groups and sustainability bodies have joined forces to launch research into how to build a stronger link between energy costs, affordability and mortgage borrowing.

Chaired by Nationwide Building Society, and marking the start of the UN Conference on Climate Change in Paris (COP 21), the LENDERS project will investigate the increased use of the Energy Performance Certificate (EPC), required on every home for sale.

The research will test the use of EPC data in estimating energy costs on individual homes and look at the potential to incorporate that estimate into the mortgage affordability calculation.  In turn, this may help encourage buyers towards homes with lower energy bills, and increase their willingness to invest in improving energy efficiency.

Andrew Sutton, Associate Director BRE Wales who is conducting the research said ‘This project is about using normal market forces to introduce energy efficiency into residential values through enabling those looking to buy an energy efficient home to have more in their pocket. This could affect the hard to reach privately owned homes to refurbishment as well as support the Chancellor’s funding for 400k starter homes.’

Supported and part funded by Innovate UK, the research draws on the expertise of diverse groups with green credentials, including Principality Building Society, UK Green Building Council, Zero Carbon Hub, Constructing Excellence in Wales, Energy Saving Trust, Arup and University College London (UCL).

Andrew Baddeley-Chappell, Head of Mortgage Policy at Nationwide, said: ‘The research will look at ways of moving away from current estimates of energy costs and towards more detailed affordability calculations based on the individual property. Fuel charges are the largest unavoidable household costs and may vary by a large degree. Such detailed data could allow lenders to acknowledge that smaller fuel costs could allow more to be borrowed on the mortgage, nudge buyers towards more efficient buildings and potentially reflect the added value of such properties.’

The LENDERS project derives from two reports into construction, lending and energy efficiency. One was produced by BRE Wales and funded by The Wales Low/Zero Carbon Hub,while another piece of work was produced by UK GBC in partnership with UCL. Now a wider group is expanding on the earlier research to create a larger study into the feasibility of influencing property choices and lending practices through energy efficiency.

For further information please contact Linda McKeown, BRE, email [email protected].


BRE: We are a world leading building science centre and the authority on all aspects of the built environment. We generate new knowledge through research that is used to create products, tools and standards that drive positive change across the built environment. We enable our government and private sector clients to meet the environmental, social and economic challenges they face by delivering higher performing, better quality, safer, more secure and more sustainable products homes, buildings and communities. We are owned by the BRE Trust, a registered charity, which funds research and education that advances knowledge of the built environment.  We are committed to building a better world together. We are BRE.

Innovate UK is the UK’s innovation agency. We work with people, companies and partner organisations to find and drive the science and technology innovations that will grow the UK economy. We’re an organisation of around 250 staff, drawn mainly from business and with a head office in

Nationwide Building Society is the world’s largest building society as well as one of the largest savings providers and a top-three provider of mortgages in the UK.  It is also a major provider of current accounts, credit cards, ISAsand personal loans.  Nationwide has around 15 million customers. Customers can manage their finances in branch, on the telephone, internet and post.  The Society has around 17,000 employees.  Nationwide’s head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline.  The Society also has a number of call centres across the UK.

Nationwide is acknowledged as one of the leading European financial institutions for ‘green’ mortgage lending. The Society’s Green Further Advance allows all existing mortgage customers to take out loans of between £5,000 and £20,000 to undertake approved energy efficiency measures such as cavity wall insulation, rated boiler installation and solar panels. Loans benefit from a 0.25% rate reduction on Nationwide’s existing range of two-year fixed rate and tracker further advance deals, with current rates starting from 1.64% and 1.49%