Commonwealth Bank of Australia (ASX: CBA) is planning to offer home loans with cheaper interest rates for houses that meet certain sustainability and energy-efficiency criteria.
CBA is the largest of the 'big four' ASX banks, featuring National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC).
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'Green home offer'
The bank's new initiative is called the 'green home offer'. It offers a 1.99% variable interest rate with a 2.45% comparison rate. However, CBA's conditions state that the product discount margin on this offer "may vary from time to time".
CBA said it wants to reward new and existing customers who're taking steps to reduce their footprint on the environment by investing in their homes, making them more energy efficient.
CBA's executive general manager of home buying Dr Michael Baumann said:
We expect all residential homes to be built to these standards over the coming years as we move towards a net zero future and by introducing the new Green Home Offer we want to encourage customers to take steps now to protect the environment and their home. We know homes that are well built and energy efficient are good for the environment whilst significantly reducing living costs and improving the wellbeing of homeowners.
How do homes qualify?
There are two options. Either the home is a certified 'Green Building Council of Australia (GBCA) Green Star Home' or it meets a number of other criteria including that it's electrified through the installation of a heat pump hot water system with no gas. It must also meet a minimum requirement for solar power generation, depending on the size of the house.
The GBCA and CBA are looking to raise awareness of this new standard of rating for larger homebuilders. It's focused on being energy efficient. This includes being powered by renewables, being fully electric, and draught sealed. Homes also need to be well-ventilated with minimal toxins in carpets or paint and be resilient through being water efficient and 'climate change ready'.
CBA said it wants to be able to provide customers with options that reduce their environmental footprint. It says it has a responsibility to do this because one in four home loans in Australia are with Commonwealth Bank. The bank also has a 10-year green loan for financing the installation of renewables in homes.
CBA share price snapshot
The CBA share price is around 2% higher since the start of 2022. However, it's down around 5% since 21 April 2022.
In other news from the bank, yesterday CBA announced the transition of its chair. The bank's non-executive director Paul O'Malley will take up the position in August.
