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Greater Manchester teams up with credit unions to provide green loans for homeowners
Greater Manchester has become the first city region in the UK to make green home upgrades accessible through credit unions.
Greater Manchester has become the first city region in the UK to make green loans accessible through credit unions, helping homeowners fund energy efficiency #UKHousingBacked by Andy Burnham, mayor of Greater Manchester, and the Green Finance Institute (GFI), the agreement sees five credit unions sign up to provide unsecured green home loans, a specialised form of consumer finance tailored to help homeowners fund energy efficiency and green home improvements.
The partnership provides local people across the Greater Manchester area with access to affordable finance to meet the high upfront costs of installing retrofit measures, one of the key barriers to the improving the energy efficiency and warmth of Britain’s notoriously draughty homes – which are some of the oldest and least energy-efficient homes in Europe.
As a recent report by Rightmove found, around half of the homes valued at over £1m with an energy performance certificate (EPC) issued in the past year have significantly improved their rating since their previous EPC, versus just 32% of properties worth less than £400,000, demonstrating that sustainable retrofit is becoming a luxury.
Green home loans help bridge this ‘green wealth divide’, between those who can afford to retrofit and those who cannot, making retrofit more accessible and more affordable for all homeowners, as well as for commercial properties.
The five credit unions, all members of the Soundpound Group (a co-operative of 14 credit unions in Greater Manchester) are now offering unsecured green home loans aligned with the Green Home Finance Principles (GHFPs), a framework developed by the GFI that recognises the use of finance to support home electrification and energy efficiency, while promoting transparency and integrity in the market.
This local alignment will make Greater Manchester the first city region in the UK to make GHFP-aligned credit union finance accessible in this way.
“The Soundpound and their members will be playing an important role in modernising our built environment to support the local economy while cutting energy bills,” said Mr Burnham.
“As part of our mission to become carbon neutral by 2038, we’re investing in cleaner, warmer and heathier buildings, modernising homes, public spaces and workplaces while creating thousands of new green jobs across Greater Manchester. By aligning with the GHFPs, our credit unions are creating a greenprint, leading the way and fulfilling a critical function in making greener homes a reality for more people.”
Offered by lenders of all sizes, from banks to credit unions, green home loans typically range from £500 to £15,000 and are repaid over shorter terms than mortgage finance, usually around five years.
The shorter borrowing period can reduce the total cost of finance, making these loans well-suited to projects like installing insulation, solar panels or a heat pump.
South Manchester Credit Union was the first to launch a GHFP-aligned product with their green loan. Now, with Metro Moneywise, Salford Credit Union, Manchester Credit Union and No1 CopperPot aligned to the GHFPs and working with local retrofit co-operative People Powered Retrofit, and more of the Soundpound group preparing to offer similar products, this model is poised to scale across Greater Manchester.
Ciara Davies, chief executive of Metro Moneywise and executive lead of the Soundpound, said: “As more Soundpound group members offer unsecured green home loans aligned with the GHFPs, we are building the kind of local coverage that makes fair, affordable retrofit finance truly accessible.
“With the support of the GHFPs, Soundpound members are helping to set a transparent, integrity-driven example for the market.”
“This is about offering people in the Greater Manchester area community-level support, helping them modernise their own homes, on their own terms.”
“These credit unions are community-rooted, values-driven and trusted by the people they serve,” added Rhian-Mari Thomas, chief executive of the GFI, which brought the credit unions together under the GHFP umbrella.
“Credit unions are uniquely placed to innovate faster than other lenders, which makes them the perfect first-mover for GHFP-aligned unsecured green loans.
“GMCA’s local leadership should inspire other regions to harness the power of community to mobilise capital into homes to finance a healthier, affordable and resilient built environment.”
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