As temperatures fall, Australian homeowners think about how to keep the cost of their energy bills down. Many of them are realising that a long-term solution is the most beneficial. In fact, according to Plenti^ research, Australian homeowners are borrowing an average of $9,046 to make their homes more energy efficient*.
Almost 4 in 10 Plenti home improvement loans are now taken out for green renovations to help reduce energy bills. Whether these renovations involve introducing energy efficient lighting, alternative power sources or low toxicity products, green renovations have emerged as a clear trend this winter.
The rise of long-term green renovations
In May 2018, we conducted a survey of Plenti customers to better understand what Australians value in home improvement and how they are bringing their renovation ideas to life. The majority of our home improvement loan customers (91%) see the use of energy efficient and environmentally friendly options as important or somewhat important to their project.
The customer survey sheds light on the reasons behind renovating, with the most common reason being improving their home’s energy efficiency (39% of respondents). In comparison, just over a quarter (26%) of home improvement borrowers are choosing to put their loan towards sprucing up tired interiors, almost two in ten (17%) are renovating a newly purchased property and 14% are investing in renovations to increase the value of their property ahead of a sale. Of the remainder, 4% require more space for their expanding family.
For many borrowers, a green renovation is more than just a one-off project. 4 in 10 current home improvement borrowers indicated that they would make additional green changes to their home over the next 12 months. Batteries and solar panels, migrating over to energy efficient lighting and energy efficient air conditioning and heating were the most popular modifications on the cards for homeowners over the next 12 months.
Going green to keep the gold
Since launching our renewable energy loan lending market just over 12 months ago, almost 1,000 homeowners have used low cost finance through Plenti to purchase energy efficient and renewable energy products to improve their home.
Interestingly, energy efficient upgrades are the most common upgrades undertaken by borrowers, followed by general painting and decorating, upgrading outdoor areas and replacing or upgrading kitchens.
|Home improvement||Borrowers applying their funds (%)|
|Energy efficient upgrades||37%|
|Painting and decorating||35%|
|New or upgraded kitchen||14%|
|Installing a swimming pool||13%|
|Granny flat / studio build||3%|
|Living area / kitchen extension||2%|
|Extension for more bedrooms||1%|
Table 1: Most popular renovations among Plenti home improvement borrowers
By securing renewable energy loans through Plenti, Australian homeowners can establish effective financial and energy efficiencies in their homes without breaking the bank. While the average renovation loan term is 43 months, it is quite common for many homeowners to enjoy reduced energy bills after the first year and recoup their full investment in less than 10 years.
Putting their money where their mouth is
According to Plenti data, homeowners overall borrow an average of $17,260 for home improvements or renovations. The biggest spenders on green upgrades can be found in Northern Territory and Tasmania, whose borrowers spend an average amount of almost $11,500. This could be attributed to NT homeowners wanting to take advantage of the high level of sun exposure in the territory, while the strong environmental consciousness in Tasmania could be influencing homeowners’ renovation choices.
|State||Average loan amount for green upgrades|
Table 2: Average spend on green upgrades by State. Source: Plenti
If these figures derived from personal loan data appear steep, it is worth noting that personal loans can be a very cost-effective way of financing renovations when compared to the financial impact of extending a mortgage. There is a temptation for people to extend their mortgage to pay for renovations because the rate may appear low, but repaying over 10 to 20 years could end up costing borrowers significantly more than a personal loan.
Consumer lenders such as Plenti are rewarding borrowers with great rates and our renewable energy loans give borrowers even better rates to reward them for choosing energy-efficient solutions. Learn more about our Renewable Energy Loan lending market
^Plenti was known as RateSetter prior to July 2020.
*Survey conducted by Plenti of borrowers, May 2018.
This information does not constitute financial advice and you should consider whether it is appropriate to your circumstances before you act in reliance on it. Any opinions, forecasts or recommendations reflect the judgement and assumptions of Plenti as at the date of publication and may later change without notice.