When comparison site Mozo analysed the personal loans in its database it found that green loans were 2.48 per cent lower on average that standard loans.
For car loans the difference was 88 basis points, with an average EV loan rate of 6.47 per cent compared with 7.35 per cent for a standard new car loan.
Mozo said some small banks are focusing on sustainable finance and attracting business with lower rates. Queensland Country Bank’s Green Reno loan rate is 6.49 per cent.
Among the big banks, Commonwealth Bank has a Green Loan rate of 3.99 per cent. It is a fixed rate for 10 years and provides funding for installation of home renewables, such as solar panels, batteries and vehicle charging stations.
NAB has announced that it will launch a range of green loans in partnership with Plenti Group.
Mozo finance expert Rachel Wastell said there were number of reasons green loans are cheaper. Lenders may be pricing competitively because they are chasing a new market segment they see as a growth area. They may also see green loans as lower risk because they are adding to property values and contributing to long-term sustainability.
They may also form part of a lender’s net zero commitment and are being subsidised to meet climate targets.
Another factor is that some lenders are receiving funds from the Clean Energy Finance Corporation, which are provided on the basis that loans will be discounted.
A recent CEFC initiative was the allocation of A$40 million to back green car loans offered by lender Firstmac, whose green loan is discounted by 1 percentage point compared with its standard car loan.
CEFC has also supported discounted EV loans offered by Taurus Motor Finance, Plenti and Eclipx.
In a deal with ANZ last year, CEFC committed funds to a $200 million lending package for business customers to cut emissions. Under the terms of the deal, CEFC and ANZ each contribute 25 basis points towards a 50 bps discount on loans of up to $5 million.
In this year’s Australian government budget, $1.3 billion was allocated to establish the Household Energy Upgrades Fund. The Fund will invest in a CEFC loan scheme, which will fund an estimated 110,000 discounted loans.