Home Owners in Favour of Lower Mortgages Based on Energy Rating

Following the conclusion of the COP 26 summit, the UK government has made several commitments to reduce CO2 emissions and strive toward net-zero.

The UK housing market contributes large quantities of greenhouse gas emissions – around 58.5 million tonnes of CO2 every year to be exact. The government must focus on making housing more sustainable if it is going to achieve net-zero by 2050 or sooner. 

The government is currently discussing plans to offer lower mortgages based on energy ratings in an effort to make houses more energy-efficient – and homeowners appear to be in favour. Here is everything you need to know about the new proposals.

Government green housing targets

As part of the UK’s strategy to achieve net-zero by 2050, the government has set an ambitious target to make all homes achieve a minimum Energy Performance Certificate (EPC) rating of C by 2035 or sooner.

Making homes more energy-efficient will play a crucial role in helping the UK work towards net-zero. Statistics reveal that the average EPC rating in the UK is D, with many older properties having a rating of E or below and most newer properties being in band C or higher.

Improving all properties in the UK to an energy rating of C will not be easy, especially for older housing. The government believes that offering lower mortgages based on energy rating will act as an incentive to boost the energy efficiency of the UK housing market.

EPC targets for mortgage lenders

The UK government is considering introducing a policy where mortgage lenders are given EPC targets. This would mean that lenders must improve the average EPC rating of their property portfolio to at least a C by 2030 or sooner. Read this report if you would like more information on the proposals currently in discussion.

Minimum EPC targets for mortgage companies are not yet in force, although many lenders are already offering green mortgages to support sustainability and improve their lending portfolios. These mortgages typically offer homeowners lower interest rates and other perks if they choose energy-efficient properties.

For instance, Natwest is offering customers a reduced fixed rate for 2 or 5 years when they purchase a home with an EPC rating of A or B. Nationwide are giving homebuyers a green cashback reward of up to  £500 when purchasing an energy-efficient property.

Are homeowners in favour of green mortgages?

Research suggests that homeowners are in favour of lower mortgage rates based on energy performance.

In a recent survey, 67% of all homeowners said a lower mortgage rate based on their property’s EPC rating would be an appealing element when looking at product features. Offering lower mortgage rates on energy-efficient properties will encourage buyers to favour homes with higher energy ratings.

Green mortgages may also encourage homeowners to complete energy-saving improvements in order to access competitive rates and green rewards. The same survey found that 48% of homeowners would consider improving the EPC rating of their property to access better mortgage terms if the upgrades paid for themselves in five years, and 24% said they plan to improve their property’s energy performance regardless.

Green remortgages

Homeowners can also take advantage of green mortgage deals by remortgaging their properties. Natwest is offering discounted 2 year and 5 year fixed rate mortgages and cashback rewards to existing customers who are remortgaging their home with Natwest and have an EPC rating of A or B. 

If your property is currently rated as C or below, then you can complete energy-saving upgrades to improve your rating and access green rewards. There are plenty of ways to improve your energy performance and many upgrades will pay for themselves in a short space of time through the cost-saving benefits.

Here are some simple ways to improve your EPC rating and take advantage of green mortgage deals:

  • Install loft and roof installation.
  • Insulate your wall cavities and floors.
  • Upgrade inefficient household appliances.
  • Replace old windows and doors.
  • Update your heating system.
  • Install solar panels on your roof.
  • Fit all lighting with LED bulbs.


Introducing green mortgages could play a key role in creating a greener housing market in the UK. Offering competitive rates and other rewards for properties with higher EPC ratings will give homebuyers an incentive to choose energy-efficient properties.

The allure of green mortgages and rewards may also encourage homeowners to carry out energy-saving improvements on their properties, especially if upgrades pay for themselves over time.

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