Here’s how CBA plans to support greener homes with cheaper mortgages

CBA is going to provide cheaper loans for homes that are more sustainable and energy efficient.

| More on:
A green-caped superhero reveals their identity with a big dollar sign on their chest.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • CBA wants to provide cheaper loans for green homes
  • Houses that are more sustainable and efficient are eligible for a cheaper interest rate
  • The CBA share price is around 2% higher in 2022

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).

‘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.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

A little boy surrounded by green grass and trees looks up at the sky, waiting for rain or sunshine.
Bank Shares

Could the CBA share price turn over a new leaf in July?

Here's what brokers are thinking about the big four ASX bank.

Read more »

a man sitting at a computer at a desk has a look of anguish and trepidation on his face as he opens his eyes wide and made an aargh type expression with his mouth as his hair stands on end and his tie also stands on end with one part over each shoulder in what is supposed to be a humorous picture of something in a panic.
Bank Shares

Why did the CBA share price crash 13% in June?

CBA shares were sold off in June. Here's why...

Read more »

Four businessmen in suits pose together in a martial arts style pose as if ready to engage in competition or spring into a fight.
Bank Shares

Why this fundie favours NAB and Westpac shares out of the big four

Two of the big ASX banks are preferred over the others.

Read more »

red percentage sign with man looking up which represents high interest rates
Bank Shares

Westpac tips another big RBA rate hike next week

Is the RBA going to raise rates again next week? Westpac thinks it will...

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

Why the CBA share price is slipping lower today

ASX financials continue to struggle in June.

Read more »

A man in a suit smiles at the yellow piggy bank he holds in his hand.
Bank Shares

Can investors bank on the NAB share price in July?

After a tough June, we consider if things can get better for the big four ASX bank.

Read more »

a group of people stand examining a large glowing cystral ball held in the hands of one of the group members while the others regard it with various expressions of wonder, curiousity and scepticism.
Bank Shares

What’s in store for the ANZ share price in July?

Investors will be hoping for a change in fortune for this ASX bank share.

Read more »

An attractive woman sits at her computer with her chin resting on her hand as she contemplates the outlook in July for the Macquarie share price
Bank Shares

What’s the outlook for the Macquarie share price in July?

The Macquarie share price has been on a bumpy ride in 2022, trading 18% down year to date.

Read more »