The non-bank lender launched its first discounted green home loan under a $ 750 million green mortgage-backed securitization program.
Firstmac has announced that borrowers will have access to discounted green home loans of $ 230 million as part of a $ 750 million green mortgage securitization held by Firstmac.
According to the non-bank lender, qualified green home loans would give borrowers a 0.4 percent financing discount for up to five years on loans of up to $ 1.5 million, while home loans would receive an interest discount of up to 1.58 percent .
The lender said that in light of increased customer demand for financial products that would help Australia transition to a more sustainable future, it is offering discounts on the base rate on all construction loans and loans for homes less than a year old with an energy rating of at least seven stars according to the Nationwide House Energy Rating System (NatHERS).
Borrowers would need a NatHERS certificate from an accredited assessor with seven stars or more, Firstmac said.
Firstmac will offer the loans in Australia with an expected average loan size of around $ 450,000, it said.
In addition, Firstmac said it will provide the entire $ 750 million in funding to offer its green home loan product. The initial seed pool will support existing Firstmac home loans worth around 520 million.
The underlying green mortgage-backed securitization mortgages are backed by eco-friendly residential real estate, while the securitization received investment aid of $ 637 million from Japanese investment bank Norinchukin and $ 108.5 million from Clean Energy Finance Corporation (CEFC), those on behalf of the Australian Government.
Kim Cannon, Managing Director of Firstmac, commented on green home loan finance: “We are excited to support efforts towards a sustainable future and to deepen our existing relationships with like-minded organizations such as Norinchukin and the CEFC by making the first Australian 100 percent green “Issue RMBS (Mortgage Backed Residential Security).
“Firstmac has offered discounted green car finance to buyers who choose low-emission vehicles. The success of this program led Firstmac to develop this innovative green home loan product. If you are environmentally conscious, Firstmac is the natural choice for your financing needs. ”
CEFC CEO Ian Learmonth also spoke about the green home loan, saying, “Green home loans are an effective way to use our funding for the long term for the benefit of Australians. With this new investment, we now have more than € 580 million.
“Since an average house has a lifespan of 50 years or more, these investments have the potential to achieve lower energy consumption in the long term and create more comfortable houses that can be operated more cheaply.”
Mr. Learmonth added, “Together with Norinchukin and Firstmac, we are delighted to have developed this first Australian securitization. This is an exciting model of a new investment product for institutional investors looking to invest their money in reducing carbon emissions. Norinchukin’s substantial support for this securitization demonstrates growing investor confidence in supporting bespoke finance for green homes. Families, investors and our environment benefit from this. “
Norinchukin’s Global Head of Credit and Alternative Investments, Hidetoshi Hasegawa, said, “Norinchukin will fund Firstmac’s future focus on green housing finance and by continuously tracking progress we will help promote green housing and global climate change.” Countermeasures through reduction greenhouse gas emissions and energy consumption.
“We also believe that this transaction will help secure stable profits through internationally diversified investments and is in line with the bank’s philosophy of sustainable business.”
CEFC funding for the Firstmac green residential property loan followed Bank Australia’s 2020 Clean Energy Home Loan.
In 2018, Firstmac introduced a lower interest rate for those who bought green vehicles, with an interest rate of 5.3 percent per year for qualified green vehicles for five-year loans compared to 6 percent per year for standard vehicles.
Gateway Bank recently launched a home loan offering that gives borrowers access to a discounted rate if their home meets certain environmental criteria.
Firstmac cited research by Climateworks Australia which showed that the real estate sector is responsible for nearly a quarter of Australia’s greenhouse gas emissions, with around half of those emissions coming from residential buildings.
She also cited research by the CSIRO which found that only 10 percent of new homes built in 2020 achieved a NatHERS rating of seven stars or more, while more than 9 million existing homes failed that standard.
[Related: Plenti launches green BNPL finance]
Malavika Santhebennur is the features editor for mortgage titles at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.