- Homeowners are using green loans for double-glazing and solar panels, not electric vehicles.
- Banks offer up to $80,000 at low interest for energy-efficient home improvements like insulation and heat pumps.
- Green loans are popular, but applicants risk break fees if they switch mortgages early.
Homeowners taking advantage of green loans are using the money for double-glazing and solar panels, not to buy Teslas, a mortgage broker told OneRoof.
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Customers at the country’s four biggest banks – ANZ, ASB, Westpac and BNZ – can access up to $80,000 on zero or 1% interest to make their homes or cars more energy-efficient.
The terms and conditions vary depending on the bank, but the loan can be used to fund a wide range of items, including insulation, heat pumps, solar panels, and double-glazing.
Tella chief executive Andrew Chambers told OneRoof that when green loans were launched, around three years ago, electric vehicles were all the rage, but appetites had changed since the removal of the clean car rebate for electric and plug-in hybrid cars and the introduction of road-use charges.
Applicants seemed to be more focused on future-proofing their homes. “The car side of it is pretty slow now, but I’ve seen more solar panels.”
Chambers said green loans were a good option for homeowners, but they weren’t free. Those applying through the banks were, in effect, locking in their mortgage rate for another three years and risked hefty break fees if they tried to switch.
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It’s not just banks offering "green" finance deals; credit card companies and suppliers were also in the game.
ANZ, ASB, BNZ and Westpac told OneRoof that customer demand for their green loans had been strong. They did not provide a breakdown of the items borrowers used the loans to fund, but they did say many customers used them for home improvements.
A BNZ spokesperson said when the loan first launched its Green Home Loans at the end of 2022 customers were focused on EVs and hybrids, but now there was also a focus on making the home warmer by installing heatpumps, insulation and double-glazed windows. People were borrowing anything from $3000 for heating upgrades to $80,000 for full window replacements.
A Westpac spokesperson said the most popular use of its Better Choices Home Loan, which allows customers to borrow up to $50,000 at 0% over three years, was improving household energy efficiency, through items like insulation, heat pumps and double glazing.
Tella chief Andrew Chambers: “The car side of it is pretty slow now, but I've seen more solar panels.” Photo / Supplied
ASB had seen a similar trend toward home upgrades. ASB spokesperson David Jackson said more than half of ASB’s Better Homes Top Ups drawn down in the last year had been used for home upgrades.
An ANZ spokesman said that while eligible customers could borrow up to $80,000 as part of its Good Energy Home Loan, exactly how much they drew down depended. Those using the money for transport tended to spend more than those using it for home efficiency, he said.
KiwiBank also offers its own variation of a green loan. The Sustainable Energy Loan offers a monetary incentive to customers wanting to install solar power, small-scale hydro, wind energy or geothermal resources.
NZ Green Building Council chief executive Andrew Eagles said there were good reasons why people should make their homes warmer, drier, and more energy-efficient.
As well as the health benefits and cheaper energy bills, there was also “tonnes of evidence” that energy-efficient homes sold for more and quicker.
Eagles said green loans were a huge win. “While the top-up mortgage offers are great to see, it is worth noting that people need to pay them back by the [advertised] due date. If not paid off in the term, the remainder is put onto your mortgage rate, which is often a lot higher.”
He suggested anyone looking to make energy-efficient changes to their home seek independent advice to work out what would give them the best value for their money.
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