KERN We launched the product earlier this year with investment from the CEFC [Clean Energy Finance Corporation]. Working together, for homes that qualify we can provide a discount of up to 40 basis points for up to five years. Half of this comes from CEFC and half from Bank Australia. This is a reasonably large discount and it is becoming relatively larger as rates decrease. We thought when launching the product that it would be enough to encourage households to do the extra work and think about the benefits.

We now have some good case studies of customers that have come to Bank Australia for other reasons and then found out about the product, discovered they can make a few changes to their planned home and have qualified for it. We have feedback saying it is a good motivator for home owners to take action.

TAM For a long time, CEFC worked with large builders and developers to try to build to higher ratings. We have also worked with community-housing providers to do this.

It has been difficult in the residential property sector because there are so many players. There are governments, councils, builders, lenders, brokers, borrowers, architects and more. There is no single large player that we can influence, so we decided the most effective route would be to get the borrower to demand high standards.

If we raise borrower awareness they can ask questions of their counterparties to get homes built to a certain standard. An attractive home-loan product incentivises the customer to make this effort, because they understand the benefit it delivers.

It also creates incentives for builders, to build to standards that allow them to tap into a niche market and potentially achieve better pre-sales. The product generates a lot more than a discount for the customer. We hope it transforms the whole value chain, from the customer to the lender and the wider industry. Then investors can collect data and understand whether it is a better credit.

KERN Absolutely. We have been testing, learning and seeing what happens. I think one of the things that allows us to have an impact here is that the very existence of the product encourages people to think and, as Grace Tam says, ask questions of everyone in the value chain.

A lot of the individual actors need to be motivated to act but also a lot have never even thought to go and get the information. In supporting this product, we have been creating a lot of content on clean-energy home loans we share with our customers. This is not with the expectation that they will all suddenly apply but to plant a seed and get people thinking so that down the track – if they are renovating, building or buying – it will be in their mind.

KERN At the moment, the green home loan is structured as a discount on our premium-package home-loan product. All the lenders and brokers that would ordinarily distribute this product have been made aware of the feature. We have also done staff training for it.

We are hoping to build the capacity of staff over time to have this conversation with customers proactively. Some are making decisions at the point where they construct a new home, and this is a key point. But there is also the opportunity to let people know that this is available if they are thinking about an upgrade in the future.