subscribe to our newsletter
Non-bank to roll out ‘green mortgage’ scheme

Non-bank to roll out ‘green mortgage’ scheme

A non-bank mortgage lender has announced that it has completed its inaugural Green Bond issuance and is looking to launch a new scheme that will offer borrowers incentives to take out green mortgages.

Pepper Money has completed its inaugural Green Bond issuance, with separate €110 million ($179 million) and $75 million tranches, totalling $254 million of residential mortgage-backed securities (RMBS) backed by energy-efficient homes.

The Green Bond issuance was part of a $1.25 billion issue of Australian mortgage-backed bonds completed on Friday (30 November), Pepper’s largest ever securitisation transaction.


It is believed that the non-bank lender is the first to offer a Green Bond linked to residential mortgages and only the second in the world to do so.

Mortgages included in the tranches were over residential properties that complied with Pepper’s definition of green mortgages (as set out in its Green Bond Framework), which is linked to compliance with energy-efficiency ratings issued by state and territory governments in Australia.

Pepper has said it plans to incorporate Green Bond tranches in all future RMBS transactions.

The Green Bond tranche reportedly attracted strong interest from both onshore and offshore institutional investors looking for socially responsible or sustainable investments.

Mario Rehayem, Pepper Group’s Australian CEO, commented: “Some of the investors in the issue were making their first investment in Australia, with a number of investors holding an ESG or SRI mandate.” 

“Looking ahead, we see strong potential for securitising green mortgages that are backed by energy-efficient homes,” he said.

Mr Rehayem continued: “Most homes today are designed for a reduced carbon footprint, and we sense a growing appetite among borrowers for loan products aligned to these same principles. Green loans will in turn support our future issuance of green bonds, which are an expanding asset class globally.”

The non-bank lender has also revealed that it will launch next year a Green Mortgage scheme, under which it will offer incentives to borrowers taking out loans secured by homes that meet the energy-efficiency criteria in its Green Bond Framework.

While more details of its Green Mortgage scheme are expected early next year, the Australian CEO said: “Pepper continues to support the communities in which we operate by extending home loans to more Australians.

“The innovative Green Mortgage scheme we have planned will help Australians achieve both a financial goal and an energy-efficient footprint,” Mr Rehayem said.

Pepper Group has completed over $4.4 billion in public securitisations in 2018, comprising both prime and nonconforming issuances, making it the largest RMBS issuer in the Australian market this year.

[Related: NAB launches green mortgage-backed bond]

Non-bank to roll out ‘green mortgage’ scheme

Annie Kane

Annie Kane is the editor of Mortgage Business.

As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also a regular contributor to the Mortgage Business Uncut podcast.

Before joining Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.


Latest News

The Liberal-National Coalition has retained power after winning the election 2019, with Scott Morrison retaining his position as Prime Minis...

Yellow Brick Road Holdings Limited has announced that it is to create a “much simpler business” by disposing of its head office wealth b...

The prudential regulator has granted a foreign ADI licence to a France-based lender.   ...


LATEST PODCAST: A new First Home Loan Deposit Scheme

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.