As the cost-of-living crisis ontinues to squeeze household finances, Barclays is to pay mortgage customers up to £2,000 to support energy-efficient home improvements.
The Greener Home Reward provides cash upfront for mortgage customers that install any one of several home improvements, including an air-source heat pump, double or triple-glazed windows, solar panels, or home insulation.
Barclays is running the programme as a pilot to collect data and insights that will inform future product development as it looks to roll-out wider home improvement support measures in the future.
Earlier this month Lloyds Banking Group combined with Octopus Energy to give mortgage customers £1000 cashback if they upped their mortgage to cover the cost of installing air-source heat pumps.
Barclays believes that the lure of a cash reward will overcome the initial intertia felt by home-owners over the large upfront costs and longer-term payback from making meaningful improvements to energy efficiency.
Dr Pete Brooks, Barclays behavioural economist, says: “When weighing up the costs and benefits of retrofitting, a behavioural bias called ‘hyperbolic discounting’ often comes into play, which in essence means that we tend to prefer smaller, immediate rewards over larger payoffs further down the line. With the expected payback period for some home improvements clocking in at over a decade, these larger options may be overlooked. Even if the long-term benefits might be greater, the end result is often inaction.
“To overcome this, our latest initiative helps provide a more immediate reward to our residential mortgage customers to help with the cost of making energy efficiency-related home improvements. Couple this with providing helpful information to consumers to help them make informed choices and we hope to encourage more people to overcome their human biases.”
As part of this, Barclays is also introducing a new Sustainability Hub for its retail customers, that will focus on educational content relating to ‘Greener Homes’ and ‘Greener Travel’. The hub will evolve over time to include a wide selection of tools, resources and content on sustainability-related topics, says the bank.
Finextra recently announced its fifth Sustainable Finance Live conference and hackathon, scheduled to take place on 29 November. For more information and to register for this event, please visit the event page here.