Bank Australia is now ramping up efforts to reach its targets of achieving net zero by 2035 by increasing the criteria customers must meet to tap into its clean energy home loans, which feature lower than normal interest rates.
In Australia, residential buildings are responsible for about 24 per cent of overall electricity use and around 10 per cent of total carbon emissions, according to Bank Australia’s head of impact management, Jane Kern.
Along with criteria updates to the loan, Kern says customers are being encouraged to take the first step through its partnership with Boom! Power – a tool that is becoming increasingly popular with banks, after ING and the Clean Energy Finance Corporation introduced the tool to its customers last year.
Bank Australia hopes customers will take up clean energy options through solar panels, heat pumps, battery upgrades or other clean energy solutions.
Customers can then apply for the reduced mortgage interest rate, for up to five years. For example, a $500,000 loan under the Clean Energy Home Loan Renovate offers a potential savings of $2856 a year.
Apart from the loan incentive, Bank Australia maintains feedback from its customers and works towards other sustainability models such as climate-focused, accessible and affordable housing, nature and biodiversity, and First Nations recognition.
“Bank Australia is committed to taking action on those issues that our customers care about. And the clean energy home is a really tangible way of putting that into practice,” Kern said.
In an interview, Kern tells The Fifth Estate that the upgrade in criteria needed for a house to qualify for the home loan was also motivated by changes to the National Construction Code.
“The grid is decarbonising, so as we look into the future, homes that are running on electricity will be in a position to have a lot lower emissions.
“The pathway we used to have for new homes needed seven stars to qualify, but we’ve upped the criteria for a new home so the minimum of 7.5 stars is needed, as well as be all-electric, and risk-free standing homes need to have solar installed.”
Customers must also have made the upgrade and provide evidence of at least three eligible upgrades in the last 18 months to qualify for the clean energy home loan. Kern says the pathway would allow customers on its regular home loan products to transition to the cheaper home loan product after the upgrade.
An ‘eco-pause’ on offer
“Some people use our ‘eco-pause’ feature, which allows you to pause your repayments for six months to help with their eco upgrades. Others top up their home loan or get another loan. There’s a range of ways people are funding the upgrades.”
Kern says the bank regularly provides resources to help customers, including its “electrify your home hub”, which had information along with Boom! Power’s digital measuring tool.
According to Kern, 4 per cent of the bank’s after tax profits are put towards an “impact fund” that funds grants and philanthropic efforts in its four focus areas.
Community housing loans
Some uses of the impact fund included lending to the community housing sector that provides social and affordable housing, with customers such as the Property Collectives as well as the disability accommodation sector.
- Read TFE’s feature on Property Collectives here.
For individual consumers buying a home, the bank also participates in programs such as the Victorian home buyer fund, an equity scheme that helps first home buyers access the housing market.
As part of its nature and biodiversity strategy, the impact fund also contributes to the bank’s Australia conservation reserve, which started with a property in Victoria’s West Wimmera Shire to protect existing remnant vegetation and restore biodiversity.
The land now spans over 2000 hectares and is managed by Greening Australia and Trust for Nature as well as traditional landowners and councils.
On top of that, the bank is also providing additional loans only available to groups representing First Nations people, as well as looking to increase First Nations procurement in the bank’s supply chains, such as procuring cultural awareness training.