Halifax will include energy performance certificate ratings when setting maximum lending amounts for borrowers.
The lender says a home’s energy efficiency “has an impact on energy bills which, in turn, has an impact on disposable income”.
The most energy-efficient homes, with an energy performance certificate rating of A or B, “will see an increase in the amount we’re able to lend,” the firm says in a note to brokers.
Energy performance certificate ratings run from A to G, with C often rated as an acceptable standard. The most common rating in the UK is D.
Around 15% of UK homes are currently rated A or B rated.
Halifax adds that homes with the lowest energy efficiency ratings, F and G, will see a small reduction in the maximum loan amount. Around 3% of UK homes are F or G rated.
Homes rated C, D and E will see no change to maximum loan sizes.
The lender says an example of the change for a customer looking for a mortgage for a property valued at £215,000 could borrow £194,000 if the property has a rating of A or B, versus £191,000 if rated at C to E, or £190,000 if rated at F or G.
The firm says the changes will come into effect on its mortgage affordability calculator on 10 December.
Trinity Financial product and communications director Aaron Strutt says: “Banks and building societies have been using discounted mortgage rates or cash back to incentivise people to make energy efficiency rating improvements, so adjusting the amount applicants can borrow based on the energy performance certificate rating is new.
“The previous government put many lenders under pressure to do more to ensure our housing stock is more energy efficient and they have been working out what to do.
“This is a big move from Halifax that other lenders may well follow. It will cost an absolute fortune to make many properties more energy efficient but there are more options to help secure funding to carry out work.
“Adjusting the mortgage loan size is a new ploy that will force many borrowers to improve their property. Some lenders already insist homes have an A or B rating to access the cheapest deals, but they don’t reduce the amount they can borrow.”
Halifax Intermediaries and Scottish Widows Bank head Amanda Bryden adds: “We know that typically, more energy efficient homes are cheaper to run.
“Using energy performance certificate data and energy bill analysis, we’re able to reflect that in mortgage affordability.”