Green mortgages, offering financial incentives like lower interest rates or higher borrowing capacity for homes meeting specific environmental performance standards, present a promising tool for homeowners and builders in the residential real estate sector to invest in sustainable, energy-efficient properties. They stand as a compelling instrument to promote and incentivise residential decarbonisation. However, the adoption and specifics of green mortgages can vary significantly across different regions worldwide, primarily due to differences in regulatory frameworks, environmental priorities, and the maturity of the local real estate and financial markets. This study explores the local green mortgage landscapes in four diverse country contexts in the APAC region, EU, and US.

Through a comprehensive literature and desk review, we aim to understand how these emerging local green mortgage ecosystems currently create value for their participants and identify the factors that most influence this value creation. We also propose potential strategies for scaling green mortgage uptake in these diverse country contexts.

Our findings identify various value-creation mechanisms. Consumers benefit from lower costs and contributing to national and global decarbonisation strategies. Lenders gain regulatory advantages by boosting their Green Asset Ratio, which is defined as the proportion of their lending to environmentally friendly projects and managing long-term risk. The financial performance of their mortgage stock also increases as green mortgages are associated with lower default and arrears rates.

We also identify potential scaling strategies. These include using digital platforms like blockchain to support consumers' decarbonisation investment process, regulatory support to improve data access, and efforts to increase consumer awareness. These insights have significant implications for policymakers, lenders, and consumers seeking to promote and invest in the next step of residential decarbonisation. More research is necessary to explore how these strategies could be implemented in country and regional contexts.