Green mortgages are a financial product which offer benefits to property developers and to sustainable housing clients. Even though these mortgages are still limited in Spain, more and more financial institutions are offering them. Last week, in this blog, we wrote about sustainable housing, and we stated that our real estate system has become aware that it must be an active agent in favour of sustainability. There is no denying that there exists a social sensitivity regarding climate change. This appears to be the case with regard to banks because, by means of green mortgages, they try to encourage sustainable real estate deals by granting loans to property developers and to clients. However, these mortgages do not only offer advantages when buying housing that respects the environment: they also offer advantages if the owner brings about alterations in order to make the house energy efficient. This is especially interesting because then the owner does not only save money in water, electricity and gas bills, but also obtains financial support with the mortgage. In this blog, we recently wrote an article about how in Europe more and more properties produce their own energy at home. It is obvious that the trend of the real estate market is sustainability and the commitment to the environment. It appears that banks have understood this issue.

SUSTAINABLE FINANCING

There is already talk of sustainable financing to refer to green mortgages. Indeed, in these mortgages, the interest rate goes hand in hand with the energy qualification for the house. Thus, the loans are more favourable regarding sustainable housing and also if the property is going to be renovated in order to make it more energy efficient. We must take into account that financial institutions prefer sustainable housing as it offers more guarantees than those which are not. Sustainable homes rise in value and at the same time reduce the risk of default on the part of the owner. As a general rule, when taking out a green mortgage, banks offer a discount of between 10 and 20 points of the basic mortgage. Generally speaking, these mortgages offer better interest rates, less commission and a lower differential. The main requirement that the financial institutions demand in order to grant these mortgages, refers to the energy qualification of the property which must be issued by a technician. How many green mortgages are there currently in Spain? This information is not available as it is a new financial product, with scarcely a few years in the market, and it is still quite unfamiliar to the public. Nevertheless, these mortgages are already operating in Europe and they seem to consolidate in our country.

TRIODOS BANK, A PIONEER IN SPAIN

Triodos Bank was the first bank in Spain that pioneered and introduced green mortgages in 2013. Since then, this bank has granted more than 1.600 green mortgages. Significantly, in 2018, the bank increased 36%, with regard to the previous year, the number of green mortgages which it granted. These facts and figures confirm the good functioning of the product. After the success of this bank, other Spanish financial institutions offered funding lines which encouraged housing sustainability. One curious fact is that the customer profile that mainly takes out green mortgages is around the age of 30. Undoubtedly, this points out what we have been saying for some time: young Spanish people are interested in sustainability when purchasing property.