Singapore banks see healthy take-up of green home and renovation loans

BANKS here have seen a strong take-up in green home and renovation loans, as they roll out such products to tap this growth segment.

DBS D05 launched the Green Renovation Loan in April. The reception for these loans since then have been "exceptionally strong", Nelson Neo, head of home financing at DBS consumer banking group, told The Business Times.

He noted that loans under the offering comprise some 80 per cent of DBS' new renovation loan bookings from May onwards. Around two thirds of its customers taking up green renovation loans are HDB dwellers.

"It's likely that green renovation loans will continue to dominate our renovation loan portfolio," Neo said.

The bank advertised that interest rates for such green renovation loans go as low as 2.68 per cent per annum. When the 1 per cent handling fee, and another 1 per cent for an insurance premium is included, the effective interest rate (EIR) is 3.43 per cent based on a 60-month tenure.

To be eligible for the loan, customers need to fulfil 3 items on its green renovation checklist, such as having energy-efficient lighting and systems, using renewable energy power sources and certified environmentally friendly paints.

OCBC O39 in March also launched home and renovation loans that incentivise residential property owners to make their homes more eco-friendly in exchange for lower interest rates.

To qualify for preferential rates under the Eco-Care Home and Renovation Loans, borrowers have to pass the Building and Construction Authority's (BCA) Tropical Home Energy Efficiency Assessment - an online self-assessment tool predicting homes' energy consumption with a "pass" or "fail" rating.

According to OCBC's website, it is offering a promotional rate of 3.98 per cent per annum. Assuming a S$30,000 loan amount over a 5-year loan tenor, the EIR is 4.6 per cent.

The bank told BT that it has seen a take-up rate of more than 3,000 such loans totalling S$500 million. Lee Mei Ling, head of home loans at OCBC, said the response has been "heartening". "Over time, we hope to encourage every one of our customers to make a conscience choice to choose climate-friendly options in their daily lives."

Meanwhile, UOB U11 has a green home loan product, which caters to homes that have the BCA Green Mark. It also on Wednesday (Oct 13) launched integrated financing platform U-Energy, to drive the development and adoption of energy efficiency projects for buildings and homes, by linking up energy service companies to customers.

To finance the projects under U-Energy, commercial and industrial building owners can either directly purchase the energy-efficient equipment or system with UOB's green financing, or take up the "energy-as-a-service" model, where UOB will provide green loans to the U-Energy partners at no upfront cost to building owners.

Homeowners can opt for a 0 per cent interest instalment plan of up to 3 years by paying for their energy efficiency retrofitting projects with UOB credit cards.

Apart from home and renovation loans, the 3 banks also offer green financing for other products, such as electric vehicles (EVs), after interest for it grew when Tesla relaunched in Singapore earlier this year.

READ MORE

• OCBC, DBS rev up green car loan competition
• New office set up to accelerate green bond efforts: Lawrence Wong