Market Research

Demand Surges for Green Homes – and Mortgages

Reflected in the shift in real estate towards sustainable and climate-conscious homes, a notable trend gaining momentum is energy-efficient mortgages (EEM). EEMs or “green” mortgages are loan products that enable borrowers to include energy-saving upgrades into their home purchase or refinance loan.

It was reported in a 2022 survey that the number of real estate agents who reported helping clients buy or sell a property with green features jumped to 50%. This was up from 32% the year before. That same survey found that 63% of real estate agents report that energy efficient features in a listing raise the value. This rising demand for green homes is leading to increasing sustainable construction practices, and a surge in eco-conscious properties.

According to Scotsman Guide, These eco-conscious mortgages represent a departure from traditional home financing models by integrating environmental considerations into the lending process. These mortgages are designed to incentivize environmentally friendly practices and sustainable home improvements.

Lenders offering eco-conscious mortgages account for a property’s energy efficiency, use of sustainable materials and other green features such as the reduction of emissions and waste when determining loan terms. One of the drivers behind the rise of eco-conscious mortgages is the array of financial incentives offered to borrowers.

These incentives can include lower interest rates, reduced closing costs or even additional financing for energy-efficient upgrades. Lenders recognize the value of sustainable homes in mitigating long-term risks, and many may view environmentally conscious borrowers as responsible, potentially more reliable and lower-risk clients.

Moreover, governments and local authorities are increasingly providing financial incentives for eco-friendly home initiatives. These can range from tax credits for energy-efficient upgrades to grants for renewable energy installations, further motivating homeowners to opt for sustainable choices.

Read More