Bank Australia has rolled out a five-year interest rate discount for newer homes that are eligible for its green mortgage product.

Homes that have a Nationwide House Energy Rating Scheme (NatHERS) rating of 7.5 stars or higher plus a solar system could be eligible for a 0.30% p.a. discount on home loan rates for up to five years under the Eco Plus Clean Energy Home Loan.

The discount is made possible by the $30m investment from the Clean Energy Finance Corporation (CEFC), which has been backing Bank Australia since it launched its Clean Energy Home Loan in 2020.

CEFC CEO Ian Learmonth said building homes that have strong energy efficiency measures creates more resilient cities and regions in the future.

“At the same time, incentivising new home buyers and builders to adopt stronger sustainability design standards is an important step in reducing our carbon footprint as we transition towards net zero emissions,” he said.

Bank Australia managing director Damien Walsh said the new incentive stems from the bank’s broader climate strategy, which considered how their clients placed importance on action towards addressing climate change.

“We’re proud that our Clean Energy Home Loan already makes up more than 1% of our total home loan portfolio,” he said.

Customers can also use the Green Star Homes certification from the Green Building Council of Australia - which assess homes under three criteria: positive, healthy, and resilient - to qualify for the Eco Plus Clean Energy Home Loan.

Borrowers in the dark about green loans

A study by Gateway Bank earlier this year showed that many Australians are in the dark about what they would need to do to be eligible for a green home loan.

Furthermore, close to half of Australian borrowers said they would only consider a green home loan if the price was right.

Around 42% of borrowers said they would consider getting a green home loan if their broker or financial institution suggested switching to or getting it.

Meanwhile, 66% would consider installing environmentally friendly features required by a green home loan, if it would be cost-effective to do so.

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