UK consumers say they can’t afford a heat pump and have a lack of understanding about how the technology works

• In a survey of UK consumers, 69% said they don’t know enough about heat pump technology

• 36% said they would need to borrow money to fund low-carbon tech in the home

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• 8 out of 10 would consider a long-term fixed-rate mortgage that helps them fund low-carbon tech and rewards them for doing so

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In a survey of more than 1,000 mortgage homeowners, outright homeowners and aspiring homeowners, less than a third (31%) said they are familiar with heat pumps (know a fair amount or a lot about them), and 18% of respondents said they don’t trust the technology.

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The research, by Energy Systems Catapult in partnership with Heatio and Perenna, is published in Heat Pump Week, a campaign to highlight the importance of heat pump technology in order to decarbonise the UK’s homes to reach net zero by 2050.

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Lack of affordability, finance options and lack of knowledge and trust in heat pump and solar panel technology, the installation process and proposed benefits are the main barriers to installation.

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More than a third (36%) said they would need to borrow money to install the technology, while the majority (83%) of consumers said they would consider financing low-carbon technology in their homes through a long-term fixed-rate mortgage that rewards energy improvements with a lower interest rate. The appeal of a long-term mortgage proposition was greater to consumers aged under 55, due to the 20+ term being in line with current mortgage terms, according to the survey.

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Unsurprisingly, outright homeowners without a mortgage were most likely to pay for low-carbon technology outright (42%) and the appeal of long-term green mortgages increased with income and was significantly higher among those with a higher income.

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Thomas Farquhar, co-founder and CCO of Heatio, said: “These findings show us we still have a long way to go before the majority of consumers are confident in installing heat pump technology. There are significant knowledge and financial barriers facing the majority of UK homeowners. Better financing options are needed to ensure everyone, not just the affluent, can make the transition to this important technology.

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“It’s particularly concerning that there is a lack of trust in heat pumps - this technology is proven to work but a constant stream of misinformation from the gas industry and in the media feeds the fear that they will not help people save money or be more environmentally sustainable. This needs to end so we can help more people adopt low-carbon technology and take positive steps to net zero and reduce energy bills.”

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The research revealed consumers are keen to make heating changes in their homes with saving money (65%) as the main driver for considering low-carbon technology, followed by environmental benefits (49%), and increasing energy costs (47%).

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Protection from potential interest rate increases was the most appealing factor of long-term fixed-rate mortgages (25%). This was followed by the stability of mortgage repayments over time (17%) and the ability to budget monthly payments (15%).

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Aniq Ahmed, Chief Communications Officer, Perenna Bank said: “Most UK consumers don’t have sufficient savings to pay upfront for heat pumps or solar panels which means finance is key to getting more homes decarbonised. Spreading installation costs over a longer term can make the investment case for these technologies more attractive by reducing the monthly payments to a level which is comparable to the amount you’re actually saving on your energy bill. This study has been essential in understanding the barriers to and incentives needed for low-carbon technology installations and how mortgage finance can help.”

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Rebecca Sweeney, Business Leader, Homes at Energy Systems Catapult said: “To transform the UK energy system and meet our Net Zero carbon reduction targets, it is essential we engage consumers by offering them innovative energy products and services that they want to take up. It is important that we make it easy and importantly, desirable for people to upgrade their homes to low carbon heating.”

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Heatio is excited to be supporting Perenna's launch of its Retrofit Discount, offering homeowners a lower interest rate on their remortgage range if they install solar panels or a heat pump.

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Interested? Visit Perenna to find out more.

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