The market for green mortgages is set to grow as consumers become more environmentally aware and demand more ethical financial products.
Don’t just take my word for it – ask the Co-operative Bank. The Co-op has been to the fore of environmental and ethical lending and investment for some time. It believes that changing consumer attitudes to global warming coupled with Chancellor Gordon Brown's recent pledges of support for green finance will lead to a significant increase in the number of UK banks offering green mortgages to customers.
Green mortgages are designed to contribute to the fight against climate change by making donations to organisations dedicated to tackling the problem or offering discounts on their standard variable rates for owners of energy efficient homes.
Only a handful of lenders currently offer them, but as concerns about the environment grow and greater incentives to go green are offered, more lenders will be queuing up to become involved.
The chancellor identified the important role lenders have in introducing 'green finance' products to help customers reduce their impact on the environment. In response, HBOS announced that it plans to launch a green mortgage next year. Yorkshire Building Society has also welcomed Brown's announcement and has stated that it will initially launch a pilot project for existing borrowers, which will make further advances available for energy-efficient enhancements for their homes, with more energy-efficient products to be added later this year.
The Co-operative Bank, which pioneered the concept of green mortgages seven years ago, said that it believes eco home loans will become the norm in the future and is currently working on new eco-friendly features to be built into its mortgage portfolio. And it is putting its money where its mouth is. For every mortgage on its books, the Co-operative Bank makes a donation to an organisation dedicated to combating climate change. This year, the amount donated since it launched green mortgages in 2000 will reach almost £1.5m.
So it’s therefore ironic that government efforts to tackle climate change and promote energy efficiency - by proposing estate agents include energy performance certificates (EPCs) in Home Information Packs (HIPs) - ignore the fact that HIPs contribute to the problem by encouraging greater road use by assessors and tree-felling for paper.
Sally Laker is managing director of Mortgage Intelligence.
The views expressed are those of the author and not those of the company she represents.IFAonline
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