Summerland streamlines green home loan process

Bolsters broker support after changing from credit union to bank

Summerland streamlines green home loan process


By Ryan Johnson

Summerland Bank has streamlined its Eco Home Loan application process as it hopes to tap into the growing environmentally conscious demographic of homeowners.

The move comes months after the former credit union transitioned into a bank as it looks to reaffirm its commitment to the broker channel.

“Our vision is ‘better banking, stronger communities,’” said Kylie Millwood (pictured above), Summerland’s head of retail, "and becoming a bank felt more aligned with our sustainable approach."

Summerland Bank’s green loan comes with a difference

Like other green loans, Summerland offers a discount on its interest rate (currently 0.15% lower) if the property has certain environmentally friendly features. To qualify for this discount, the home must have at least five of the 10 features included in Summerland’s sustainability list.

Among other features, the list includes:

  • Solar panels: These generate clean energy from the sun, reducing your reliance on the grid. (Minimum 5kW capacity required)
  • Battery storage: This allows you to store excess solar energy for later use, maximizing your self-sufficiency.
  • Energy-efficient air conditioning: Homes with a minimum 5-star energy rating to minimise energy consumption.

Unlike other green loans, Summerland avoids time-consuming third-party verification, simplifying the process with in-house evaluation through contracts, valuations, or photos.

“From a customer perspective, we wanted to keep it simple,” Milwood said. “Rather than going through a rigmarole of getting independent certification that can take weeks if not months, the customer can show us evidence in-house and get the process going.

“We appreciate that interest rates are quite high now, so we want to make it easier to reward people who choose to have these features in their homes.”

What borrowers want green loans?

Despite a tough economic climate and rising interest rates, a surprising number of Australians still prioritise sustainability when choosing their finances. This is according to an Equifax Broker Pulse Survey, which found that 30% of consumers surveyed care about sustainability in their loans.

However, only 4% of brokers would have placed green loans at the top of their lists when considering what their customers want.

Therein lies a gap between what borrowers want and what is currently delivered.

“Honestly, I think green loans are still largely overlooked,” Millwood said. 

“Conversations often focus on interest rates and loan types, neglecting the client's personal values and priorities. It's crucial to personalise the conversation and understand what motivates their financial decisions.”

Milwood said understanding if sustainability matters to the client and if they seek a bank that aligns with their values is crucial.

“Discussing interest rates and delving into their current home situation can then guide them towards relevant products like the Eco Home Loan,” she said. “While more brokers are becoming aware of these products, proactive engagement in conversations is key.”

As to who wants these products, Summerland’s target demographic is younger Australians, particularly in regional areas.

However, Millwood said the Eco Home Loan has seen a surge in interest beyond its target market, attracting environmentally conscious individuals, particularly in major cities like Sydney, Melbourne, and Perth.

“Different generations have different priorities, and sustainability seems to be increasingly important for younger demographics,” Millwood said. 

“We're also seeing interest from eco-conscious millennials and young families who are raising their children with environmental values. They appreciated the reward element and the opportunity to contribute to a greener future.”

Summerland’s transition from credit union to bank

Summerland's recent transition from credit union to bank raised questions among brokers about potential changes. However, Millwood said that the core values and approach remain the same.

“We're still customer-owned and maintain boutique relationships with our brokers,” she said. “We don't chase major groups, focusing instead on brokers who align with our values and offer personalised service to customers seeking competitive rates and a smaller, more caring approach.”

While becoming a bank has enabled the company to chase sustainability initiatives such as B-Corp certification, Millwood said the shift has had minimal impact on operations.

Most feedback from the bank’s partners, which include Outsource Financial, Regional Financial Solutions, and Westlawn Financial, has been positive, according to Millwood.

“The third-party channel is crucial,” she said. “Customers appreciate having choice, and brokers offer that access. We've seen continued growth and will continue to collaborate with partners, seeking opportunities to expand.”

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