Borrowers are increasingly seeking energy-efficient homes and lower running costs, meaning advisers must continue to adapt to shifting lender requirements
Green mortgages have been on the radar in New Zealand for several years, but advisers say the market has reached a turning point — with demand accelerating as borrowers look for smarter ways to manage household costs and future-proof their homes.
Becs McCallum, director and senior mortgage adviser at Loan Market McCallum & Co, says she's seen a noticeable uptick in green mortgage enquiries over the past year.
But while sustainability is often the headline, McCallum says the real driver in many client conversations is far more practical — to reduce outgoings — with green lending products increasingly being used as a strategic tool to improve cashflow and affordability, particularly in a market where borrowers are still feeling the pressure of elevated interest rates and cost-of-living constraints.
"Especially in the last six to 12 months, we have far more clients looking at these options," she says.
"It seems that with everything that is going on overseas at the moment, people are concentrating on creating efficiencies where they can in the family home."
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And McCallum says the shift isn't limited to new borrowers. Many clients already using green lending products are now actively trying to preserve those benefits when refinancing or restructuring.
"Thankfully what we are seeing is banks coming to the party," she says.
"Clients who have existing green energy home loans in place for six to 12 months are saying, 'I don't want to lose the benefits, but I want to shift somewhere.'
"And what's positive, from what I have seen, is that banks are being flexible and following through with those great terms."
Priority Home Loans adviser Nicole Keane is seeing the same trend, particularly among borrowers looking to renovate or purchase a vehicle.
"This offers clients that are doing eligible renovations to their home at a lower rate, which makes renovations more affordable. It is also a great option for clients wanting to buy electric vehicles at far superior rates."
And cost savings are certainly driving the conversation.
With some lenders offering green lending rates between 0% and 1% for eligible purchases, McCallum says it can be 'cheaper money' for improvements that provide lasting value. And that longer-term lens is becoming a key part of adviser strategy — using green lending not just as a standalone product, but as a way to reshape a client's wider debt position.
But while green lending is no longer a niche category, advisers say the range of offerings, and the differences between lenders, can still create confusion.
"Most tend to have a rate of 0–1% across three to five years," says McCallum.
"However, some banks will look to have it documented over 30 years, some will have it documented and paid in the three to five years. So, it's worth clients talking to their adviser to see what the right benefit is going to be."
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Keane agrees that green loan criteria is still variable across the market.
"The criteria is very specific and changes bank to bank," she says. "And it seems some bank policies are more flexible than others."
For advisers, this inconsistency creates both an opportunity and a risk. Green products can add significant value, but only if advisers fully understand the eligibility requirements, repayment structures, and whether the client's overall financial position supports the strategy.
And both McCallum and Keane say one of the biggest issues is awareness — in that many clients don't know these products exist until an adviser introduces the concept. Keane says it's a simple shift in adviser approach, to dig deeper into the client's plans.
"Clients wanting to do renovations to their home may not be aware of the products available so it is always good to ask more questions about renovation projects.
"Alternatively, if they are wanting to purchase a vehicle, they may not be aware of the product so it's good to talk this through with them so they can make an informed decision."
McCallum says consistent communication is also important, particularly as products and policies change. And there is also value in not just knowing which lender offers what, but how to structure green lending into the broader home loan strategy — with McCallum increasingly splitting loans to ensure clients can maximise lower-rate portions.
Both advisers expect demand for green mortgages to grow steadily over the next five years, and Keane believes environmental awareness will play a stronger role over time among New Zealand borrowers. However, one of the main challenges advisers and their customers are currently facing is product complexity and eligibility requirements.
"One of the biggest things for us is that you can't get a pre-approval for a green mortgage as the banks require quotes and invoices first — but that is only after having a clear understanding of what kind of products apply for the lending — and that can sometimes slow the process down."
And Keane agrees that a key hurdle is knowing what qualifies.
"It's ensuring clients are not only aware of the products available, but can make sense of the eligibility criteria too — and that's where we as advisers can help."
While green lending is still evolving, McCallum believes sustainability-linked lending is on track to become a normal part of mortgage advice — particularly as clients prioritise running costs and lenders expand their offerings.
"I think it's going to become a normal part of the process for clients with their mortgages in order to have a healthier, warmer home while also saving money on interest repayments."
