CBA reveals innovative new mortgage option: 'Lifelong discount'
Published 4 May 2022
This week, Commonwealth Bank (CBA) launched a new variable home loan product with rates starting from 1.99 per cent.
But there’s a catch: the home must pass minimum energy-efficiency and sustainability standards.
However, houses built to the standard needed to qualify for CBA’s new green loan offering would also save homeowners on energy bills.
According to a recent report, building an all-electric, 7-star-energy-rated house - which is what’s required to qualify for CBA’s green loan - Australians could save an average of $450 a year on their power bills.
While building energy-efficient homes is more expensive, due to the costs of better insulation and other additional costs, research has shown these expenses are offset by lower energy bills over time. Scroll back up to restore default view.
How can I qualify?
The new green home loan offering is the first of its kind from a major bank. According to the bank, the green loan offer is a pricing discount on a standard variable rate that will remain constant over time.
To qualify for the loan, customers must either have a certified Green Building Council of Australia (GBCA) Green Star Home, which is a relatively new standard for building comfortable, energy-efficient homes.
Alternatively, the home must have a 7-star or higher Nationwide House Energy Rating Scheme (NatHERS) rating - which is the energy rating for homes, similar to the star ratings on appliances - have all-electric appliances (no gas) and rooftop solar.
Borrowers must also be owner-occupiers, paying principal and interest, with at least a 20 per cent deposit. Investors and borrowers with smaller deposits can apply, however, their interest rates will be determined on application.
“We want to reward new and existing customers who are taking actionable steps to reduce their environmental footprint by investing in homes that are efficient, comfortable and healthier for them and the environment,” CommBank’s executive general manager of home buying, Michael Baumann, said.
RateCity.com.au research director Sally Tindall welcomed CBA’s decision to reward its environmentally conscious customers with a sub-2 per cent rate.
“And while variable rates are set to rise, the discount will remain for the life of the loan," she said.
However, she said the product was primarily designed for new builds and renovations.
“As such, the initial uptake will be limited,” she said.
“However, with more Australians focused on building sustainable homes, the appetite for these loans will hopefully grow over time.”
Other green loans available
Tindall said there were several other lenders offering green mortgages, with interest rates starting as low as 1.88 per cent and sustainability criteria differing across each product.