UK Unveils Blueprint to Help Lenders and Builders Scale Green Mortgages

Dozens of top players from the finance, energy and built environment sectors have thrown their weight behind a new plan to design and expand the UK’s green mortgage market. The Green Home Finance Roadmap for the Mortgage Industry, developed jointly by the Green Finance Institute and the Green Mortgage Advice Initiative, carries the endorsement of 34 major organisations, including Santander, Barratt Redrow and the Association of Mortgage Intermediaries.

The document outlines a comprehensive strategy for establishing a robust green mortgage sector in the UK. The Government sees this as a key tool for boosting energy efficiency in homes and accelerating the adoption of clean technologies such as heat pumps and electric vehicle chargers. If successful, the approach could improve living conditions, reduce household energy bills, and shield homeowners from sudden spikes in gas prices.

Green mortgages give borrowers preferential lending rates for homes that are already low-carbon or for properties that come with a binding commitment to be upgraded. For the latter, lenders may also offer special grants or loans for retrofitting measures such as improved insulation or the installation of low-carbon heating systems.

The Roadmap identifies priority actions for the short, medium and long term. These actions are targeted at policymakers, regulators, investors, lenders, industry associations and charities. The plan aims to address barriers that have so far hindered the sector's growth, including the need to mobilise more capital, develop innovative financial products, train staff to better understand the market, clearly communicate benefits to homebuyers, and ensure robust consumer protections.

Lenders and industry bodies are being urged to use the Roadmap as a foundation for creating new green mortgage products. They are also expected to report back on their progress and share lessons learned to help the entire sector evolve more quickly.

Chloe Timperley, campaign lead at the Green Finance Institute, stated that the Roadmap was developed in consultation with the industry and provides a practical means to measure progress. It enables the sector to celebrate shared successes, identify areas where further work is needed, and continue advancing without falling into repetitive conversations or isolated efforts.

A Growing Market Opportunity

The UK’s mortgage market is valued at around £242 billion annually. Research from the Green Finance Institute suggests that over half of buyers are interested in a mortgage that would enable them to improve their home’s energy performance and adopt renewable energy sources. Interest is exceptionally high among first-time buyers in Scotland, where eight out of ten said they would like to take out a green mortgage.

However, buyers often struggle to find clear information on the products available. Many report difficulty accessing tailored advice or support. There are also concerns over how the market is regulated, how the environmental impact of these mortgages is measured, and what role regulators should play in guiding its growth.

GMAI chair Richard Merrett said: “The Roadmap is a timely and much-needed resource for both lenders and intermediaries. It brings clarity, direction and momentum to a complex and fast-moving space.

“From the start, we have championed a ’country not club’” approach to the green agenda, and this document embodies that ethos of collective action.”

The Roadmap emphasises that these challenges will necessitate collaboration among financial services, housebuilders, real estate investors, and policymakers in Westminster. Energy Secretary Ed Miliband has already acknowledged that the Government cannot shoulder the full cost of making the UK’s housing stock energy efficient. He has said his team will explore changes to stamp duty or council tax to reward homeowners who cut heating-related emissions, alongside direct support for scaling the green mortgage market.

The Climate Change Committee, the Government’s independent advisory body, estimates that decarbonising residential properties to meet the UK’s legal commitments will require investment of more than £311 billion in capital expenditure between now and 2050.