Fact checked
Banks and lenders are riding the “green” wave and are increasingly offering green financing catered to encouraging sustainable housing.
According to QBE’s 2022-2025 Housing Outlook: Green Edition, two major forms of green finance are green upgrader loans and green home loans.
QBE LMI general manager Pat Priest said the expansion of green home loan offerings gives households the opportunity to access discounted interest rates if they build, buy, or renovate a home to meet certain energy ratings, with criteria including efficient hot water systems, electrified fixtures and appliances and rooftop solar systems.
“Making it more affordable to own a green home is a key enabler for consumers to switch over to energy efficient choices,” she said.
According to REA Group’s PropTrack Energy Efficient Housing Report, more than half of Australians believe that energy efficiency ratings for homes as extremely important.
QBE LMI recently launched discounts on the cost of lenders’ mortgage insurance for borrowers buying a property that has at least a NatHERS 7-star rating or a Green Building Council of Australia Green Star rating. The offer is available to home loans under NAB and Bank Australia.
The QBE report said green home loan market in Australia is still in its relative infancy.
In fact, current offerings only give households discounted interest rates if their homes meet certain energy ratings.
“Studies conducted in the USA and the Netherlands indicate that a higher building energy rating is associated with significantly lower probability of mortgage default,” the study said.
According to REA Group’s PropTrack Energy Efficient Housing Report, more than half of Australians believe that energy efficiency ratings for homes as extremely important.
“This suggests that energy efficient ratings complement borrowers’ credit information and that lenders using this information can make superior lending decisions than traditional credit information.”
Major banks' green offerings
Based on website searches, here’s what each of the four major bank has to offer in terms of energy efficiency and sustainability for homebuyers and borrowers:
ANZ
As of press time, ANZ does not a specific home loan products for borrowers in Australia.
However, it did launch Good Energy Home Loan in New Zealand early in July.
The ANZ Good Energy Home Loan top up will allow customers to borrow up to $80,000 at a 3-year fixed rate of 1% per annum and can be used to upgrade homes with things like solar panels, heating and insulation, double glazing, ventilation systems and rainwater tanks.
The loan can also be used for electric and hybrid vehicles, and EV chargers.
CommBank
CommBank’s Green Home Offer is a standard variable rate home loan that can be used to buy, build, or renovate homes to be more sustainable, climate resilient and efficient.
The product offers discount on CommBank’s standard variable rate for owner-occupier and investment home loans with either P&I or interest-only payments.
The offer is in partnership with Green Building Council of Australia.
NAB
NAB recently announced two offerings for its customers who meet sustainability criteria:
- A lower base variable lending rate, with a discount of up to 100bps on their home loan.
- A 5% reduction on the cost of LMI through QBE.
Westpac
Like ANZ, Westpac does not have a green home loan specific to Australian customers, but it has the Westpac Warm Up loan in New Zealand.
Westpac Warm Up is an interest-free loan of up to $40,000 for five years for the installation of energy-efficiency features like insulation, heat pumps, double glazing, ventilation, wood burners, solar power systems, and EV chargers.
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