Halifax: Two thirds of mortgage further advances go towards upgrading the home

Posted on Thursday, September 1, 2022

Around two thirds of mortgage further advances are being used towards upgrading the home, according to the latest data from Halifax.

Halifax conducted a survey of over 4,600 people looking at spend on homes and gardens, people’s attitudes towards becoming greener and the new home must haves.

People borrowing more on their mortgage intend this to go on home improvements, including general home updates, buying consumer goods and making repairs, ranging between 64% and 70% of all agreed advances, since 2020.

The survey also found that over a fifth of people are making home improvements (22%) to improve energy efficiency, something that is becoming increasingly important as energy bills rise.

Halifax mortgages director Kim Kinnaird says: “Improving the energy efficiency of your home can help reduce your bills and, as we head into colder months, keep you warmer. So, if you’re embarking on home improvements, it’s well worth making sure you’re thinking ‘green’ at the same time – even small changes can add up.

“Draft exclusion, better underlay, loft insulation, and double glazing can be done relatively easily with an immediate impact. Ground and air source heat pumps, or solar panels, are more expensive options that can bring real financial and environmental benefits over the long term.”

Ofgem has recently confirmed that the energy cap will be raised from £1,971 to £3,549 a year from October.

Outside of immediate concerns for staying warm this winter, brokers are concerned that affordability assessments with be significantly affected, making it more difficult for people to buy a home.

Dimora Mortgages director Jamie Lennox says his firm has already see this happen, detailing that, “10 days ago we checked affordability with one lender and, as of today, they are now offering £8,000 less on the maximum people can borrow.

He is one of many voices who say that Energy Performance Certificate (EPC) ratings will likely become more important to prospective buyers. “Some will end up ruling out moving house or ignore a whole type of property that are deemed less energy efficient,” he says.

Quantum Mortgages founder and managing director Jason Neale says the biggest challenge is getting existing stock from an EPC rating of D or E, up to a C.

Neale explains: “As lenders, we have made a pretty poor effort when it comes to green mortgages because they don’t actually do anything practical to help the landlord upgrade the property.”

“Lenders need to be doing more to support this,” he adds.

Earlier this year, a mortgage climate action group was launched, initially through a partnership between Legal & General, Sesame Bankhall Group and SimplyBiz Mortgages.

The group’s aim is to interpret new climate change legislation and engage with industry stakeholders to provide guidance and practical help for advisers.

Since the launch, Home Loan Partnership, Mortgage Intelligence, Primis, Openwork and Paradigm have also joined.

This followed the UK government’s announcement that it wants homes in England and Wales to reach a minimum EPC level of C by 2025 and the private rental sector for 2035.

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