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Australia’s largest bank, the Commonwealth Bank, has broken new ground by announcing it will be implementing green home loans.
In a significant move, the big four bank stated that from the beginning of May 2022, it would be accepting applications for its green home loan scheme, making them just the seventh lender in Australia to do so.
Green home loans are offered to applicants whose home meets certain sustainability and energy efficiency criteria.
Commonwealth Bank’s Green Home Loan 1.99 per cent standard variable rate is the second-lowest interest rate among lenders offering green home loans, trailing only loans.com.au’s rate of 1.88 per cent, with the bank not opting to implement a loan cap like other lenders have.
The big bank views the move as part of a larger social trend towards increasing climate consciousness as Australian society aims to change its attitudes and habits to be more environmentally friendly.
“It’s important that in addition to supporting those customers who build a green star home, we are also wanting to support customers with a low variable rate if they invest in homes that are efficient, comfortable, and healthier for the environment with a CBA green home offer,” CommBank’s executive general manager of home buying Dr Michael Baumann said.
“We really want to reward new and existing customers who are taking actionable steps in reducing their environmental footprint.”
Dr Baumann noted that the bank was delighted to be working with the Green Building Council of Australia (GBCA) on this scheme, a partnership that he acknowledged will raise awareness of their green home standard as well as prepare the bank for the future of housing, which they view as being green.
Davina Rooney, chief executive of the GBCA, shared Dr Baumann’s sentiments and expressed her company’s enthusiasm for the collaborative approach taken by the two corporations.
“Australians want better homes that are healthier for their families, lighter on their wallets and better for the planet. We are thrilled to work with Australia’s largest lender, CommBank, to raise awareness of the financial and environmental benefits of building a green star home,” she said.
Dr Baumann said the loans would be open to new and existing customers as long as their home complies with the program’s standards.
“The good news is that new and existing customers will be eligible for CBAs green home offer if their home is either a certified GBCA green star home, or their home meets the following criteria: has a NatHERS rating of seven or more stars, has solar energy which meets the requirements relative to the size of the house and has a heat pump hot water system and no gas,” he explained.
The introduction of green home loans paired with the bank’s partnership with GBCA signifies CommBank’s intentions to remain innovative and proactive regarding climate-friendly lending.
As Dr Baumann stated, Commbank anticipates an increased uptake of GBCA standards in the coming years.
“We are really delighted to be working with the GBCA to raise awareness of their green star home standard, which is an independently assessed sustainability standard. We expect all residential homes to be built to these standards over the coming years as we move towards a net zero future, and by introducing the new Green Home Loan offer we want to encourage customers to take steps now to protect the environment and their home,” he said.
RateCity.com.au research director Sally Tindall believes that with one in four home loans with Commbank, the bank’s move into the green home loan market will accelerate the pace at which similar schemes are implemented by other large banks and lenders domestically.
“The green home loan space has had a slow start in Australia, but with CBA now in the game, more lenders are likely to follow,” she said. “This is a positive and important step from Australia’s biggest bank. Offering an ongoing incentive for building a green home is the right thing to do.”