Solution: Use concessional public wholesale finance to fund a below-market retail loan product that lets existing mortgage customers borrow specifically for defined bushfire, flood, storm and cyclone resilience upgrades alongside energy efficiency measures.

Key challenge: Mortgage lenders hold the longest financial relationship with any property, often 25 years or more, yet play almost no role in funding resilience; homeowners face concentrated upfront costs for bushfire, flood and storm hardening with no dedicated affordable financing route, at a time when 1.3 million Australian properties are projected to be uninsurable by 2100.

Context: Australia faces rising property insurance costs, with average premiums up around 14%, and a projection that 1.3 million properties will be uninsurable by 2100. Much of the housing stock predates modern standards: the minimum energy standard for new homes is currently 7 stars, but homes built before 2003 have an average rating of just 1.5 stars. The product is available nationally across urban, peri-urban and rural residential property. Retrofit costs are typically funded from savings or unsecured credit. The Australian Government's AUD 1 billion Household Energy Upgrades Fund (HEUF), managed by the government-owned Clean Energy Finance Corporation (CEFC), was created to make retrofit finance cheaper at scale and is expected to help a total of 110,000 households. A Lonergan Research survey of more than 1,000 Australians commissioned by Westpac found nine out of ten who aim to renovate in the next five years would consider a sustainable upgrade to their home.

Solution in practice: In August 2024 Westpac became the first bank supported by the HEUF, launching Sustainable Upgrades home and investment loans at a variable rate of 4.49% p.a. (comparison rate 4.87%), materially below its standard basic variable rate - a customer with a AUD 30,000 balance saves roughly AUD 3,475 in interest over ten years. The CEFC committed AUD 160 million of wholesale finance, expected to support at least AUD 320 million of discounted lending. Eligible customers are owner-occupiers and investors with an existing or approved Westpac home or investment loan of at least AUD 150,000 secured on the property being upgraded, with no lenders mortgage insurance applicable; they can borrow AUD 4,000-50,000 over up to ten years with no establishment or monthly account fees, and funds are paid directly to the supplier or installer against an invoice. Critically, the eligible upgrade list is not confined to energy efficiency: it includes defined climate-resilience measures such as roofing with non-combustible materials, sarking, framing and external finishes; non-combustible or fire-rated window frames, metal flyscreens or shutters and toughened glazing; doors of non-combustible material or solid timber; fencing within 1.5m of the property using non-combustible materials; and storm and flood-resilient electricals - with non-combustibility defined against National Construction Code 2022 Volume 2 Class 1.

Impact / outcome: AUD 160m CEFC finance expected to support at least AUD 320m of discounted loans at 4.49% p.a.

Next steps: The CEFC has committed AUD 160 million towards the product, which is expected to support at least AUD 320 million in discounted loans to eligible Westpac home loan customers; the CEFC states that its wholesale finance, combined with a significant contribution by Westpac, delivered a low rate intended to improve accessibility and drive further take-up of green home loan products across the market. Westpac was the first bank supported by the HEUF, following the CEFC’s first HEUF investment with non-bank lender Plenti. This is a direct instance of the playbook action area 2a on bringing lenders into resilience finance, where the playbook identifies the remaining opportunity as exploring loan terms that recognize documented resilience measures, and closer data sharing between lenders and insurers so that both view the same risk in the same way.

Organizations involved:

Authoring: Westpac

Actors: Clean Energy Finance Corporation (CEFC)

Implementation partners: Investors & Banks; Regulators & Policymakers; Property value chain stakeholders