The growing momentum behind green lending

Q. What trends are we seeing in green loan demand?

In the first half of 2025, we’ve seen continued growth in inquiries and demand. This growth in consumer awareness is driven by more lenders launching products and initiatives, such as the Clean Energy Finance Corporation’s (CEFC) Home Energy Upgrades Fund (HEUF).

In research carried out by Gateway at the end of 2024, 28 per cent of consumers said they were aware of green loans in the market, up from 23 per cent two years prior.

A focus on more sustainable residential buildings is also driving awareness and demand. A great example is the Green Building Council of Australia’s (GBCA) Green Star Buildings Apartments Pathway – a new rating system that independently verifies the sustainability of apartments within a certified building. Home owners who have a Green Star Buildings Apartments Pathway certification qualify for Gateway’s discounted Green Plus Home Loan.

In the past six to 12 months, Gateway has also collaborated with more brokers that specialise in green lending. Seeing more brokers actively engage and specialise in the green lending category will only help drive knowledge, awareness, and demand.

With the combination of government initiatives and the continued sustainable developments in the building sector, we will see an increase in green lending throughout the remainder of 2025.

Q. What do borrowers seeking green loans want?

Interest rates remain the key driver. As one respondent in Gateway’s recent survey mentioned: ‘They’d need to be a bit cheaper, otherwise what’s the point.’

While price remains key, factors such as simplicity and ease of process are important too. Borrowers might understand there needs to be some sort of verification required to qualify for a green loan, but lenders still need to make sure the process is as simple as possible.

Alongside the green lending interest rate is the broader theme of saving money through sustainable upgrades to borrowers’ homes. The double benefit of reducing the day-to-day living costs, combined with a cheaper interest rate, is a compelling drive to seek a green loan.

Over 53 per cent of consumers said that a broker or lender recommendation was key to supporting their decision to seek a green loan, highlighting that trusted advisers are important in the consumer’s decision making.

Other elements that some consumers highlighted included the ‘green’ credentials of the lender and a sense of pride in having a green/sustainable property that qualifies for a cheaper rate.

Q. What sets Gateway Bank’s award-winning green loan portfolio apart?

Gateway’s award-winning Green Home Loans are designed to align with our Pocket & Planet ethos, which aims to empower our members to adopt a sustainable lifestyle quickly and affordably, helping them save money while reducing their impact on the environment.

Our Green Plus Home Loan offers a discounted interest rate for the life of the loan, not just for a few years, and is accessible to properties with a range of certifications, such as NatHERs, National Efficiency Scorecard, Green Star Homes, and Green Star Apartments from GBCA.

Gateway is also one of the few lenders to offer Green Home Loans for apartments and investment properties and our owner-occupied Green Home Loans are certified by the Responsible Investment Association Australasia (RIAA).

Alongside our green home loans, we also offer Eco Personal Loans for smaller upgrades and specialist EV loans for low-emission vehicles.

Q. How has Gateway Bank adapted its products?

Gateway launched its first Green Home Loan in mid-2021 and has seen strong growth across its green portfolio over the past four years. The initial products were targeted solely at residential homes with either a NatHERs 7-star rating or a range of sustainable features.

We’ve expanded the offering to cover more energy efficiency certifications, sustainable upgrades, and upgrades to energy efficiency ratings.

We’ve also reacted to the increased demand for green lending for apartments by expanding our green offering to investment lending and a sustainable commercial lending offering.

We continue to engage with consumers and brokers for opportunities to evolve our proposition and support members to achieve their goals of going greener quicker.

Q. Why should brokers write more green loans?

Our research highlights a mismatch between borrowers seeking green loans and the broker market share. Only 23 per cent of respondents said that they would use a mortgage broker to help source a green home loan – significantly lower than broker market share – which is more than 70 per cent. With three-quarters of respondents saying at this point that they wouldn’t approach a broker to source a Green Home Loan, this is an opportunity for mortgage brokers to include Green Home Loans in their portfolio/offer and capture this growing market.

Q. What advice would you offer to brokers new to green lending?

The green lending category is growing and, while some of the qualification criteria can seem daunting to new entrants, it’s just a case of understanding each lender’s criteria. A green loan is really like any other and the best way to gain comfort around it is to chat to the lender’s broker team or your BDM. Gateway’s broker team is well-versed in helping brokers that are new to the category and can support brokers through their initial inquiries and applications.

As the economy continues its sustainable energy transition over the near to medium term, the opportunities green lending presents will provide borrowers with access to savings on borrowing and their day-to-day cost of living. This also provides opportunities for brokers to support their client base and capture this growing market.