Finance company reveals details of finance deal and confirms fixed rate of 6.96%

Green Deal loans will attract a fixed interest rate of 6.96%, the company behind the initiative has confirmed, honouring a government pledge to keep rates below 7%.

The Green Deal Finance Company confirmed the rate while announcing details of the finance deal arranged last month with industry stakeholders, the government and the UK Green Investment Bank.

A £244 million funding package includes £50 million from the Department for Energy and Climate Change comprising a £20 million junior capital facility and £30 million of contingency funding.

The funding package also includes £69 million of funding provided by a group of 16 stakeholders including DECC, British Gas and EDF Energy. A £125 million senior debt facility was provided by the UK Green Investment Bank.

Mark Bayley, chief executive of the Green Deal Finance Company, said: “By ensuring that can only borrow what they expect to save in energy bills, and by offering a fixed rate for 10 to 25 years, Green Deal plans will be affordable and widely available to over 80% of the population.

“No other consumer credit product offers a fixed rate for up to 25 years and is this inclusive.”

The Green Deal Finance Company said a further debt facility from the European Investment Bank would allow it to offer more than £300 million in loans during its first year.