The ABC will offer lower rates for green homes
Commonwealth Bank is trying to win over millennials and younger customers by offering lower interest rates on mortgages for homes that meet high environmental standards, as banks compete to promote their green credentials .
The CBA on Wednesday became the first major bank to offer a green home loan, promising lower rates if customers’ homes meet specific criteria, including minimal use of solar panels, no gas appliances or hot water heating.
The launch, which comes as smaller lenders are already targeting the green home loan market, is the latest sign of banks’ competition for environmentally conscious customers as banks face pressure over their role in the climate change.
The ABC said the loan would offer variable rates as low as 1.99% for homeowners who had at least a 20% deposit and had taken out a mortgage package. To qualify, the client’s home would have to meet detailed criteria, including having a minimum number of solar panels and having electric cooking and heating instead of gas.
Dr Michael Baumann, the bank’s executive managing director for home buying, said the product would be open to people building new homes and those renovating, noting that many young customers have raised sustainability concerns. .
“We see a lot of customers, especially when we talk to more millennial or Gen Z customers who really push us, but also some of their parents…to think about how they can build and work sustainably” , Baumann said on Wednesday.
He acknowledged that the number of homes that would qualify for the rate would initially be “relatively limited”. However, he said the bank believed there would be strong growth in building green homes and wanted to provide financing to help customers improve their environmental footprint.
“We want to reward new and existing customers who take concrete steps to reduce their environmental footprint by investing in homes that are efficient, comfortable and healthier for them and for the environment,” Baumann said.
Sally Tindall, research director at comparison website RateCity, said it was the lowest variable rate announced by the ABC and predicted other major lenders would look to move into this part of the market.