Halifax announces 'big move' coming into force next week that is a 'game changer' for homeowners

Halifax has announced a 'big move' coming into play from next week that is said to be a 'game changer' for homeowners. The major bank unveiled today (December 6) that starting from Tuesday (December 10), it will be using a property’s Energy Performance Certificate (EPC) rating in its affordability calculations.

Halifax says the move will 'better reflect' the impact of household energy bills, providing a 'more tailored view' of the cost of living in each home. It will also encourage homeowners to improve energy efficiency while making properties 'more affordable' to own.

Halifax announced: “We are now able to better reflect the impact of home energy costs, and some of the financial benefits of more energy efficient homes. We continue to support customers looking to improve the energy efficiency of their properties, with our Green Living Reward cashback proposition and our partnerships with heat pump, solar panel & insulation installers.”

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The lender added: “Within our affordability model, assumed ‘cost of living’ values are already incorporated, which include energy costs. This adjustment reflects a more tailored view of these costs. A customer whose property has a higher EPC rating (e.g. A/B) will generally have lower energy costs than those with a lower EPC rating (F/G) on like-for-like use."

For properties with an A/B EPC rating (c.15%) you may see a small increase in the maximum loan amount available and for properties with an F/G EPC rating (c.3%), a small decrease. There is no change to the maximum loan available for properties with a C, D or E EPC rating or where the EPC is unknown.

Mortgage brokers have said this is a "game changer" and "a big move". Iain Swatton, director at Exemplar Financial Services commented: "Halifax’s move to factor EPC ratings into affordability calculations is a game-changer, encouraging homeowners to improve energy efficiency while making properties more appealing to buyers and more affordable to own.

Iain continued: "By linking living costs to energy performance, Halifax is leading the way in nudging consumers toward greener choices. With some lenders already pricing mortgages based on EPC ratings, this progressive step could spark industry-wide competition, driving innovation and affordability. A unified approach across the sector would maximise benefits for consumers, the property market and the environment alike."

Aaron Strutt at Trinity Financial commented: "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 EPC 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."