Discounted rates for energy efficient home improvements

Yorkshire Building Society will launch its first Home Energy Efficiency mortgage for existing customers on Thursday 19th April 2007.

The additional loan is the forerunner in what will be a suite of home loans that focus on energy efficiency as a way of saving money for the homeowner. Unlike a number of other energy efficient home loans, this mortgage offers a discount to the customer as well as being beneficial for the environment.

The Home Energy Efficiency Additional Loan will be available at 5.65% for five years, a discount of 1.50% from the Yorkshire’s Standard Variable Rate of 7.15%. The minimum loan will be £1000 and the maximum £15,000. Payment holidays and unlimited overpayments are allowed. There is no product fee and no early repayment charge.

Rob Prior, Product Manager, Mortgages explained, “We are seeing an increased consumer awareness of energy use and its effect on household bills. The Energy Saving Trust, through the Energy Saving Partnership for Homes, has been very helpful in giving us advice on the type of home improvements our borrowers should focus on. This has helped us to understand the impact, in both CO2 and financial terms, of some of the most significant actions consumers can take in their homes - a list is attached in Appendix 1. Our first step is introducing an Additional Loan for existing customers which will only be available for approved energy efficiency home improvements.”

Research during 2006 of the Society’s Member Panel showed that 55% of members thought that lenders have a responsibility to help fund energy efficient home improvements. 49% thought that the most effective way of doing this was by offering low cost loans and 71% thought that making energy efficient improvements would improve the attractiveness of their homes.

With the launch of Home Information Packs in June and the necessity to have an Energy Performance certificate, it is anticipated that demand for home improvements that affect energy efficiency will increase dramatically. The house buying public will be focussed on which houses are more energy efficient and it is expected that those properties with a good score for environmental impact together with energy efficiency will be the most easily saleable.