Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the potential merits of including energy efficiency in the lending decisions of mortgage companies.

In the Clean Growth Strategy, the Government set out that we would work with mortgage lenders to develop green mortgage products that take account of the lower lending risk as a result of the reduced energy costs associated with more energy efficient properties.

The Government also supported the ‘LENDERS’ project with funding from Innovate UK. The LENDERS project, which reported in 2017, looked at the impact of including more accurate estimates of energy bills in mortgage affordability assessments.

Alongside the Clean Growth Strategy, the government published a Call for Evidence on building a market for energy efficiency which included proposals for encouraging lenders to offer green mortgage products. This Call for Evidence closed on 9 January 2018. Following an evaluation of the responses, we will publish an action plan on additional market based measures later in 2018.

Following the publication of the Clean Growth Strategy, BEIS and HM Treasury ministers also jointly set up a Green Finance Taskforce, which brought together senior leaders from the finance sector. Their objectives were to help deliver the investment needed to meet the ambitions and commitments set out in the Clean Growth Strategy, whilst consolidating the UK’s leadership in financing international low carbon investment. The Taskforce published their recommendations in March this year, including how to encourage the development of green mortgage products. The government is currently considering these recommendations and will respond in due course.

We are already seeing progress, and leadership from within the finance sector. Following the Green Finance Taskforce’s recommendations and the success of their Green Bond, launched in November, Barclays recently launched the first green mortgage product by a major UK lender, which will reward homebuyers who choose to buy an energy efficient new build home with a lower interest rate on their mortgage. This is an encouraging step and I hope other lenders will follow suit.