UK's biggest lender to offer larger mortgages on energy-efficient homes

by Aaron Strutt

Dec 06 2024

Halifax for Intermediaries is starting to use the Energy Performance Certificate ratings (EPC) on flats and houses to determine the maximum mortgage loan size.

Halifax says the EPC ratings will help the bank reflect the impact of home energy costs and some of the financial benefits of more energy-efficient homes. 

A customer whose property has a higher EPC rating, say A or B, will generally have lower energy costs than those with a lower EPC rating. This means that due to the way mortgage affordability rules work, Halifax expects borrowers will have more disposable cash so they can borrow more. They also have to spend less in the future to improve their property's energy efficiency.   

Mortgage applicants may see a slight increase in the maximum loan amount available for properties with an A or B Energy Performance Certificate rating and a slight decrease for properties with an F or G rating. The bank says there is no change to the maximum loan amount available for properties with a C, D, or E EPC rating or where the EPC is unknown.

Aaron Strutt, product director at Trinity Financial, says, "Mortgage lenders have been doing more to tempt borrowers with cheaper rates if they have an A, B, or C energy efficiency rating. They do not usually offer to lend them more money. Halifax's move isn't great for borrowers buying older or energy-efficient homes, but other lenders may start doing something similar next year. 

"Within the Halifax mortgage affordability model, assumed ‘cost of living’ values are already incorporated, which include energy costs. The new adjustment reflects a more tailored view of these costs." 

Halifax says it will continue to support customers looking to improve the energy efficiency of their properties with its Green Living Reward cashback proposition and partnerships with heat pumps, solar panels, and insulation installers. The lender offers £2,000 cash back when adding an air—or ground-source heat pump and £500 cash back when installing a biomass pellet boiler or solar thermal heating system.

The bank also offers cash back for solar panels, insulation, and rated double/triple glazing when replacing single glazing. Customers must open a Halifax current account to qualify, and there are time constraints for claiming the cashback. 

Rightmove's Greener Homes Report 2024

Rightmove's Greener Homes Report 2024 outlines the current obstacles and suggests ways to accelerate the transition to a greener housing stock. It also looks at the emergence of a ‘green wealth divide’, the impact of the new government’s 2030 EPC targets for rental homes, and the things that could be done to help households go greener.

The report highlights: 

• At least 18 million homes—over half of all housing stock—need improvements to reach an EPC rating of C, which would cost over £196.7 billion, around £10,907 per household.
• 50% of properties valued over £1 million have significantly improved their rating since their last EPC, compared to only 32% of properties valued under £400,000.
• In the rental market, an estimated 2.9 million properties need to be improved to reach an EPC C rating, which will cost £23.4 billion—around £8,074 per property for a landlord.
• Half of landlords (50%) are concerned that the government will introduce costly charges for not meeting EPC requirements.

Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation

The information contained within was correct at the time of publication but is subject to change.

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