Consumer interest in green mortgages is evolving, with a notable increase in available products but a lack of corresponding demand. As of 2026, the market has expanded significantly, with over 3,260 green mortgage options now available, compared to just four in 2019. However, despite this growth, consumer uptake remains low, raising questions about the effectiveness of current offerings and incentives.
What Are Green Mortgages?
Green mortgages are financial products designed to encourage environmentally friendly home purchases or improvements. These mortgages typically offer lower interest rates or cashback incentives for properties that meet certain energy efficiency standards, often linked to the Energy Performance Certificate (EPC) ratings. The aim is to promote energy-efficient homes and renovations, thereby reducing overall energy consumption and costs for homeowners.
Why Is Demand for Green Mortgages Low?
Despite the significant increase in product availability, experts suggest that consumer demand for green mortgages has not risen as expected. Industry leaders, such as Rebecca Wilkins from Cutting Edge Mortgages, indicate that consumer interest has not grown, even amid rising household energy bills. Liz Syms from Connect Mortgages attributes this low demand to product design rather than a lack of environmental concern among consumers. Many green mortgage products are more appealing to buyers of new builds, as approximately 85% of these properties meet energy efficiency criteria.
What Incentives Are Available for Green Mortgages?
Many lenders are offering attractive incentives for green mortgages, such as cashback rewards or reduced interest rates. For instance, HSBC provides a £2,000 cashback incentive alongside competitive rates for its green mortgage products. Additionally, Skipton Building Society supports higher loan-to-value (LTV) borrowing on its green mortgage products, offering deals up to 95% LTV on a repayment basis. Other lenders, like the Ecology Building Society, offer significant discounts for borrowers who improve their property’s energy efficiency.
What This Means for Landlords and Borrowers
For landlords, the push towards energy-efficient properties is becoming increasingly critical, especially with regulations mandating that by October 2030, all buy-to-let properties must have an EPC rating of at least C. Recent data from Paragon indicates that 56.4% of buy-to-let lending in the first half of 2026 was on properties rated A to C, up from 49.9% the previous year. This trend highlights the growing importance of energy efficiency in the rental market and the potential benefits of green mortgages for landlords looking to comply with upcoming regulations.
