Green is undoubtedly the new black. You only have to look at the television to see numerous adverts focussed on green issues, with an ethical approach being taken to finance in particular.
For example, HSBC has a big advertising campaign promoting what it calls a ‘green sale’ at the moment, promising to pledge 2 to a range of environmental charities for every green product a customer buys.
This year is shaping up to be one in which environmental issues will be at the top of many people’s agendas, particularly as climate change becomes more evident in our everyday lives. But should it be at the top of mortgage borrowers’ agendas? The answer to this depends on the individuals concerned, as it is more of a choice than a quest for best value.
So, what can we offer those borrowers who are determined to go green? Let’s assess what lenders have to offer.
Norwich and Peterborough offers green mortgages on new and existing homes. Older homes will benefit from a free energy survey and a 500 cashback towards implementation of energy-efficiency measures.
New homes are required to meet high standards of energy efficiency. For every one of its green mortgages taken out, N&P promises to plant 40 trees over the first five years of the loan, calculating that this will absorb the amount of carbon dioxide emitted by a typical property over this time.
But the rates are not exactly earth-shattering, with a four-year fixed rate at 5.64% or 5.94%. There are discounts, the best of which is 5.49%, although this is likely to move up when N&P announces its new SVR.
As you would expect, the The Co-operative Bank also offers green mortgages, making an annual payment to Climate Care – an organisation dedicated to addressing global warming – for every mortgage arranged.
Again, rates are not particularly competitive but one feature does stand out – there is no higher lending charge. This means someone who wants to borrow 95% could do well compared with the rest of the market.
The final lender worth considering is Ecology. At a glance its single rate of 6.4% is uncompetitive but it will lend on unusual properties, which means that its loans could be the only route to the housing market for some borrowers.
So if a client comes to you wishing to renovate a water tower into the home of their dreams or a windmill into their luxury retirement property, Ecology is likely to be your first port of call.
In evaluating these mortgages, we can safely conclude that they are not competitive. But having knowledge of them is likely to be increasingly important for brokers.
Our detrimental impact on the environment is not going to stop so it follows that more people will strive to do their bit to help, even if that means a relatively small commitment by going green on their mortgage. This means brokers must be armed with the knowledge that will allow them to help their clients.