HSBC rolls out the UAE’s first green mortgages

Lender to offer home loans with discounts and incentives to customers purchasing properties certified by the Leadership in Energy and Environmental Design

HSBC plans to add more features and currencies to the Global Money Account in the coming months. Photo: Reuters

HSBC issued the first green mortgages in the UAE, joining lenders around the world that are offering sustainable finance products to align with their environmental, social and corporate governance commitments under the Paris Agreement.

The lender approved three mortgages for customers purchasing homes in The Sustainable City community in Dubai, the bank said in a statement on Sunday. The green home loans will be available for properties across the UAE if they meet sustainability criteria, the bank added.

The green home loans offer an interest rate discount of 0.25 per cent for properties that meet certain sustainable criteria and a 50 per cent reduction in bank processing fees, the lender said.

Lenders around the world are increasingly offering green finance products to customers, particularly younger generations, who are choosing their bank based on their ESG credentials, according to a recent report by global consultancy KPMG.

It's vital that banks support customers with competitively priced green finance and encourage more sustainable behaviours

“Sustainable development is more important now than it’s ever been and it’s vital that banks support customers with competitively priced green finance and encourage more sustainable behaviours,” Daniel Robinson, head of wealth and personal banking at HSBC UAE, said.

According to data from the World Green Building Council, buildings are responsible for more than 39 per cent of all global carbon emissions due to the energy needed to cool, heat and supply electricity to homes and workplaces.

Green lending models allow banks to link a property's energy rating to the interest rate paid by borrowers, real estate consultancy CBRE said in its Green Mortgages Post-Covid report. By choosing a green mortgage, home buyers are not only contributing to a more sustainable future but they also stand to save money, the paper added.

“Issuing the UAE’s first-ever green mortgages is a significant moment for the country’s housing and financial markets, and demonstrates the appeal of green retail finance to customers looking to make more sustainable decisions while appreciating the financial upside,” Mr Robinson added.

HSBC's green mortgages are applicable for properties that are either LEED-certified or if they meet similar requirements, the lender said.

LEED (Leadership in Energy and Environmental Design) is an internationally recognised green building certification system, providing third-party verification that a building was designed and built using sustainable strategies. It was developed by the US Green Building Council.

"This is to benefit buyers of properties that are LEED-certified for the platinum or gold level and offers discounts and incentives for these loans," Arran Summerhill, company director at Holo Mortgage Consultants in Dubai, told The National.

“Sustainable City and Falcon City of Wonders would fall into this category. The developments are scarce at the moment, but it is a great initiative to reward people who are looking to buy in these areas.”

HSBC also offers other sustainable finance products in the UAE, including green car loans and sustainable investment fund options, the statement said.

HSBC saw a six-fold increase in sustainable and transition finance activity in the region in 2020 compared with the previous year, it added.

Globally, HSBC said it would align financed emissions from its portfolio of customers to the Paris Agreement goal of net zero by 2050 or sooner.

The lender expects to provide between $750 billion and $1 trillion in sustainable financing and investment by 2030 to support clients as they switch to more sustainable ways of doing business. The bank aims to be net-zero in its own operation by 2030.

“We are proud to be the first development in the region to have our residents benefit from the issuance of HSBC’s green mortgage,” Faris Saeed, chairman of Diamond Developers, developer of The Sustainable City, said.

“With a commitment towards achieving net-zero carbon living, we have worked hard to set high standards of sustainability across all our communities.”