Buyers of energy efficient homes will be offered discounts on their home loan interest rates as part of a new ‘green loan’ initiative being launched by lender Firstmac.
Under the ‘green home loan’ program, buyers of homes with a high energy efficiency rating will have access to concessional interest rates for their home loans.
A house with a 7 star or higher rating under the Nationwide House Energy Rating Scheme (NatHERS) will be able to benefit from a home loan offered by Firstmac with a 0.4 per cent discount on borrowing rates. The discount will apply for five years and will be available on loans of up to $1.5 million.
Construction loans will also benefit through an interest rate discount of up to 1.58 per cent.
A total of $230 million in new green loans will be made available by Firstmac, and forms part of a $750 million mortgage-backed securitisation. Firstmac will add an existing $520 million pool of home loans to the $750 million green loan program, adding loans where homes are compliant with the residential Low Carbon Buildings Criteria created under the global Climate Bonds Initiative.
Firstmac is Australia’s largest non-bank lender and said that the new loans had been created in response to growing customer demand for finance options that help homeowners make investments in lowering their household energy use.
“Firstmac has offered discounted green car finance to buyers who choose low emission vehicles. The success of this program has led Firstmac to now develop this innovative green home loan product. If you are environmentally conscious, then Firstmac is the logical choice for your financing needs,” Firstmac managing director Kim Cannon said.
The Clean Energy Finance Corporation (CEFC) has invested $108.5 million in the concessional home loan plan, as part of a total $750 million raised by Firstmac. Japanese investment bank Norinchukin provided the bulk of the investment finance, contributing $637.5 million.
CEFC CEO Ian Learmonth said that the creation of dedicated green loans has proven to be an effective way to support investments in energy efficient housing.
“Green home loans are an effective way to use our finance to benefit Australians over the long term. With this new investment we have now committed more than $580 million to cleaner greener homes Australia wide, including more than $220 million to green home loans,” Learmonth said.
“With the average home having a life span of 50 years or more, these investments have the potential to lock in lower energy consumption over the long term, as well deliver more comfortable homes that are cheaper to run.”
“Together with Norinchukin and Firstmac, we are pleased to have developed this Australian first securitisation. This is an exciting model for a new investment product for institutional investors wanting to put their money to work in cutting carbon emissions. Norinchukin’s substantial backing for this securitisation demonstrates growing investor confidence in backing tailored finance for green homes. This is delivering benefits to families, investors and our environment,” Learmonth added.
The Firstmac green loans program follows an earlier investment by the CEFC in a Clean Energy Loans program in partnership with Bank Australia. The CEFC said that a total of $90 million in concessional loans had been issued through the Bank Australia program, launched last year with similar energy efficiency requirements as the new Firstmac program.