It aims to support mortgage members with 0% borrowing
Nationwide Building Society has reduced the interest rate on its green additional borrowing to 0% to support mortgage members who are improving the energy efficiency of their homes.
The new 0% green additional borrowing products, which will be available from June 1, will enable up to 5,000 households with a Nationwide mortgage to borrow £5,000 to £15,000 up to a maximum of 90% loan-to-value (LTV) across the two- or five-year product term.
With the UK’s 29 million homes producing some 16% of the country’s emissions and a commitment to reach the net zero target by 2050, Nationwide’s approach aims to contribute towards that goal through retrofitting properties.
The lender said that while it has limited ability to reduce emissions on the properties it lends on, it hopes that by removing interest on its green additional borrowing products, it can effect positive change.
The new green additional borrowing home loan will be available via Nationwide’s mortgage advisers, as well as brokers. All of the loan must be used to fund non-structural, energy-efficient home improvements, such as solar panels, air source heat pump, window upgrades, boiler upgrades, cavity wall insulation, loft insulation, or an electric car charging point.
“Residential properties are one of the biggest causes of emissions, and there is a need for more to be done by government and business to encourage households to act,” Henry Jordan, director of home at Nationwide Building Society, said. “A key barrier to making homes more energy efficient is not only the upfront costs associated with retrofitting, but also the payback period of making such changes.
“It’s clear to us that only meaningful incentives will help shift behaviour. So, by launching this latest product for up to 5,000 of the society’s mortgage holders, we can test and understand whether offering 0% interest will encourage members to make the necessary green home improvements, where the costs of finance may have, until now, discouraged them.”
Rohit Kohli, operations director at The Mortgage Stop, said Nationwide’s decision “represents a significant step forward in the mortgage and property industry.”
“It’s encouraging to see a lender that’s actively working towards distinguishing its green products from standard offerings,” Kohli commented. “This move by Nationwide, which is a first in our sector, is quite refreshing. It’s a clear commitment to supporting the development of more energy-efficient homes.”
Justin Moy, managing director at EHF Mortgages, added that the launch of the new product is “an excellent opportunity for Nationwide customers to borrow for any work that will improve the EPC rating, without any interest costs.”
“It’s arguably the best green mortgage solution from one of the high street lenders to support the improvement in property efficiency,” he added. “You just need to watch the rate, as it will jump from 0% to the lender’s SVR in either two- or five-years’ time.”
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