Green mortgages on the rise - high cost reflects impending interest in sustainability
As stated by Asufin, the supply of green mortgages has doubled, but the cost of this growing benefit has been the increase in the price of their installments, which shows that the priority of the European agenda is sustainability. Your luxury real estate Valencia helps you to analyze this phenomenon.
The rise of green mortgages and its unnoticed side effects
It is very easy to hide a harm behind a disguised benefit, and this is what is happening with green mortgages for those who are looking to buy their first penthouse in Valencia. The proposals for green mortgages have increased significantly since 2022 to date, since from five types of offers offered by only two financial institutions last year, we now have nine offers spread over six entities.
Banco Santander has decided to redouble its commitment and offer the first mixed ecological green mortgage on the market.
However, according to information gathered by the Association of Financial Users (Asufin), the cost to be assumed by these attractive and varied proposals is a higher price in the mortgage payment to buy an apartment in Valencia.
The numbers the green mortgage can't hide
Behind the very strategic marketing of green mortgages to encourage the fact of buying a Valencia apartment in conditions that are committed to sustainability, the mortgage rates are hidden, which cannot hide what lies behind this desperate attempt to push us to extreme sustainability at any price.
In its IV study focused on the conditions of financial products, Asufin revealed that the APR of the fixed green mortgage stands at 5.63% and that offered by the variable green mortgage stands at 4.63%, both figures well above the 3.75% APR offered by the average mortgage in the market.
Which financial institutions offer green mortgages?
Currently, if you want to buy an apartment in Valencia with a green mortgage, you can obtain it through the following financial institutions:
- Caixabank
- Banco Santander
- BBVA
- Cajamar
- Banco Mediolanum
- Triodos Bank
- Bankinter
What are green mortgages for?
The green mortgage arises with the purpose of helping you to buy a Valencia apartment that is environmentally friendly, that is, whose construction has been designed to save energy consumption. At the same time, it is also available to finance the construction of new buildings in Valencia and to reform a house in order to make it more sustainable.
In the beginning, this financial product was presented as a way to reward those who wanted to buy a sustainable and environmentally friendly apartment in Valencia . The problem is that this award is no longer reflected in reality.
What was the initial promise of green mortgages?
In order to persuade mortgage users to opt for the green ecological alternative, financial institutions had to promise more than energy savings in housing, so they promoted the launch of green mortgages by assuring that they would offer a cheaper APR than the conventional mortgage. However, when we analyze the practical cases, we see that their rates are from 0.88% to 1.88% more expensive than the traditional ones.
And these percentages are those reported by Asufin, since the comparator Kelisto shows an even more alarming data: the interest of the fixed green mortgage is on average 6% higher than that of the common mortgage. And there is still more: it has been detected that the best green mortgage is 33% more expensive than the conventional one.
Requirements for accessing a green mortgage
The green mortgage has certain requirements, since it is not granted for the purchase of all Valencia apartments that are sustainable, but it is mandatory that the following conditions are met:
- Energy rating of A or A+.
- To have 20% of the value of the property to pay for it at the time of purchase, since the bank only covers up to 80% of its value.
- High income
Advantages of the green mortgage
Beyond the lack of ethics of the entities that offer it, who presented it in one way and then put it into practice in another, the green mortgage has many advantages for those who are thinking of buying an apartment in Valencia or reform it to meet sustainability standards. Such advantages are what we tell you from our real estate Valencia:
Economic savings
Although such savings are not presented, as promised and implemented at the beginning, in mortgage payments, saving money is a reality with green mortgages, since what they finance is a sustainable home, with which you will save money every month in electricity and gas consumption, and, if we go to the extreme, also in water, because certain proposals for sustainable housing include recycling of water used inside the home.
Revaluation of your home
A new build sustainable Valencia property is worth significantly more than one that has nothing to do with sustainability. Therefore, whether you apply for a mortgage to refurbish your Valencia penthouse or to buy a new one, that property will be worth more in the future than one with the same or even better conditions that is not sustainable, and that will benefit you significantly if you decide to sell it.
Better quality of life
Heating an environment with your own solar energy guarantees you a better quality of life than if you were releasing chemicals into the air you breathe in your home that have proven to be harmful to your health. In addition, reducing our monthly expenses leads to a reduction in stress, which also represents an improvement in the quality of life. Overall, the green mortgage opens the door to a new way of living, where clean air, saving money and reducing environmental chemicals are part of the deal.
Environmentally friendly
Ultimately, by buying your Valencia penthouse with a green mortgage you will be part of the change that the planet needs to continue to be for your children, grandchildren and all your descendants, the home it has been for you.
What is the future of green mortgages?
It is clear that currently the green mortgage to access your penthouse Valencia is not the best option from the point of view of personal finance. For this new form of access to housing is imposed on the traditional mortgage, it will be necessary that banks improve their prices and fulfill the initial promise to offer a cheaper product than so far existing, while it is also essential that more financial institutions are encouraged to offer it, as this will generate more competition and, therefore, better price options for customers. Finally, from our Valencia real estate agency we are convinced that banks need to promote the green mortgage in a more massive way, in order to reach all possible financial users.
Awaiting completion of the EeMap project
The EeMap project, launched in 2018, is emerging as the great promise for the final consolidation of the green mortgage. Its initiative consisted of launching a standard green mortgage for the whole of Europe in order to assess user reception. Once the project is stabilized and consolidated, it is very likely that the green mortgage will reach the conditions that were promised when it was in its initial phase.
Where to start?
The first step towards a green mortgage, or traditional mortgage, is to choose the house or penthouse Valencia in which you are going to live. As a luxury real estate agency Valencia 360 we have a wide portfolio of properties, as well as new construction projects Valencia designed to your needs, contact us and let's start your new life as a homeowner!