The Government could force mortgage lenders to fund green home loans as part of plans to tackle climate change.

Speaking about the introduction of home information packs (HIPs), Yvette Cooper, the housing minister, has suggested that lenders should offer extra money to homeowners to put towards improving the energy efficiency of their properties.

Ms Cooper said: "From next June every homebuyer will know exactly how energy efficient their homes are and how they can improve this. Why shouldn't this information be used by mortgage lenders or energy companies?”

Other countries offer green mortgages which give homebuyers money to meet the costs of making energy saving improvements. In England, sixteen councils have piloted schemes with energy companies where council tax rebates are offered to people who make energy saving changes to their homes.

When HIPs are introduced in June next year, homes will be issued with an Energy Performance Certificate (EPC), or energy rating, ranging from A to G and a list of suggested improvements. Extra funding from mortgage lenders would act as an incentive for homeowners to make the recommended changes to their property.

By taking steps such as improving insulation, double-glazing and using energy saving light bulbs, the Government estimates that carbon emissions in the UK could fall by as much as 27 per cent. The measures could also lead to savings of an average £300 a year for homeowners on their fuel bills. Energy costs have risen by more than 35 per cent so far this year.

The mortgage industry said that it would discuss with the Government how lenders could provide extra funding, but said that energy companies, local authorities and landlords should also play a role.

Green mortgages are already available but not widely marketed. The Council of Mortgage Lenders have confirmed that they would be happy to discuss with the government its ideas for a framework in which mortgage funding could contribute further to making homes more energy efficient. A number of lenders already take into account utility bills when assessing how affordable a mortgage would be.

Your home may be repossessed if you do not keep up repayments on your mortgage.
Article date: 10.06