Banks Should Provide ‘Sustainable’ Loan Packages, According To Project Green CEO
The most important consideration for the vast majority of people taking out a bank loan as the main source of financing their property’s purchase, is the interest rate being offered by their bank, according to the PwC’s latest Real Estate Survey.
70% of respondents to the survey took out bank loans to finance their property purchases.
Of these, 78% chose to go with a loan from one bank over another by comparing respective rates of interest – as opposed to other considerations, such as loan packages that “include attractive features for energy-efficient development”.
According to Steve Ellul, CEO of Project Green, the survey’s results are a sign that banks need to do a better job of incentivising buyers to “offer cheaper rates for green home loans” – so that the strategies for tackling environmental and economic concerns will be in alignment, rather than being in opposition.
“We need to turn this figure upside down. We need 80% of our mortgages to have green options embedded in them so we can truly send an economic signal to developers: build better, build greener.”
“The best way to achieve this is by incentivising banks to offer chepear rates for green home loans.”
Though it is certainly not encouraging that only 20% of people considered an “sustainable” loan package to be more important a motivator than an interest rate, this number is up from 8% during the same period last year.
It is certainly true that people would be more likely to opt for an environmentally appealing loan package if it were also the more economically appealing choice – yet banks, which handle money to make money, won’t be making that choice themselves until they see profitability in it.
To realise this strategy, legislation compelling or incentivising banks to comply with Ellul’s recommendations would need to be introduced by governing entities.
This could help relieve a burden of rising prices, and increased concerns amongst prospective buyers about the sustainability – both economic and environmental – of living in Malta in the coming decades.
Lone individuals, with all the will in the world, cannot make personal decisions which will overturn the profit oriented approach of an entire economic system. A profit seeking entity, such as a bank, will certainly not make those changes unless compelled to do so.
According to this survey, there has been a significant drop recorded in the first quarter of this year, compared to last, in the proportion of respondents looking to buy a property.
This figure sat at 51% last year and has fallen to 42%.
Not coincidentally, the proportion of respondents looking to rent has risen significantly over the same period. While Q1 of 2022 saw 12% looking to rent property, many seem to have been hit with a hard reality check. An astonishing 31% were recorded as looking to rent in Q1 of 2023.
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