New green home loan has interest rates from 2.44%

Australians will soon be able to get home loans with interest rates from 2.44% if they buy or build housing that meets high energy efficiency standards. The Clean Energy Finance Corporation (CEFC) is launching a new green home loan program for borrowers who meet a minimum seven-star energy rating. This is the first home loan in Australia to use energy efficiency measurement tools to determine eligibility. CEFC is partnering with Bank Australia to deliver it.

The discount is 40 basis points on the applicable Bank Australia Premium Package Home Loan rate. Based on its current lending rates, the Clean Energy Home Loan will start from 2.78 per cent p.a. variable, or 2.44 per cent p.a. fixed for two or three years.

For those wondering, CEFC is an Australian Government owned bank that was established in 2012 to facilitate increased flows of money and financial opportunities into the clean energy sector. They invest across agriculture, energy generation and storage, infrastructure, property, transport and waste from their $10 billion fund in order to deliver a positive return for taxpayers.

This new green home loan will be a major game changer for the Australian property industry — and might reduce your home loan by 0.4 percentage points. All you have to do is buy or build a home with a minimum seven star NatHERS rating. A minimum of seven stars under the Nationwide House Energy Rating Scheme (NatHERS) – which rates the energy efficiency of a home based on its design – exceeds the minimum standards of the National Construction Code (six stars is the current minimum standard in most states/territories), and homes built to this rating require less energy for heating and cooling. In the long term, this is great for your wallet as it reduces energy bills, but combined with this new home loan some buyers will have quite a bit of extra money.

CEFC CEO Ian Learmonth said: “This green home loan will fill a gap in the market, giving builders and new home buyers a financial incentive to adopt sustainable design principles from the start of the project. New homes built today will be in use for decades to come. We want those homes to have the strongest energy efficiency and to deliver the smallest carbon footprint possible.”

CEFC and Bank Australia are currently planning to extend the Clean Energy Home Loan into existing homes in the future, although it is unknown when this will happen. This will finance green home improvements, including energy monitoring, energy storage systems, solar hot water and energy efficient air conditioning.

The push for more environmentally-friendly housing will greatly affect the future of Australia. Given that the property sector accounts for roughly 23% of Australia’s greenhouse gas emissions, more green homes could bring down the countries emissions quite dramatically. In fact, the Australian Sustainable Built Environment Council (ASBEC) and ClimateWorks Australia have identified potential energy savings as high as 25 per cent through the adoption of higher clean energy standards in new residential buildings in a recent report. Their report, Built to Perform: An Industry Led Pathway to a Zero Carbon Ready Building Codefound that the benefits would flow from measures such as improved air tightness, double glazed windows, insulation, adjustable outdoor shading, ceiling fans and more efficient air conditioning, lighting and domestic hot water systems. The upfront costs would be more than offset by the energy bill savings, reduced spend on heating, cooling and ventilation equipment, and electricity network savings.

There are a number of projects throughout Australia that will be bringing a more eco-conscious future into fruition. In particular, Queensland has quite a few projects that are currently under construction.

Written: 15 February 2020

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