I don’t know if you’ve managed to latch on to one of the latest fads sweeping the nation, but it seems everyone is starting petitions to the Prime Minister on the government’s website. Heralded as an example of democracy at work, it has, on the whole, been hijacked by nutjobs and pranksters looking for a way to pass the time and raise a cheap laugh. Notable examples include: ‘abolish school half-term holidays – ideally all holidays – and require children over the age of 10 to go to school 52 weeks per year’, and ‘give Kriss Akabusi a knighthood’.
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However, while it may be the preserve of the bored and cantankerous, every once in a while it spits out a nugget or two which touches a nerve and forces the government to sit up and take notice. The obvious example of this was the plan to charge drivers for every mile they drove using satellite technology, which attracted over one million signatures in opposition and made it onto the front pages of every national newspaper in the UK.
Hitting the right note
This hopefully goes to show that while you can dismiss the small voice, if the cause is noble and hits the right note, the mainstream has to take notice. Much can be said of the ‘green’ debate, which has gone from background idealism to political centre stage in the last 12 months. The main parties have all been aligning themselves as the greenest alternative and Labour made its latest move in Chancellor Gordon Brown’s 11th Budget.
Announcing to the Commons, Chancellor Brown said: “I have been consulting with the major banks and building societies and encouraging them to create a new market – mortgages for immediate capital investment in energy efficiency that cuts consumption and cuts bills that in the end not only pays for itself but increases the sale value of the home.”
This seemed to fire the starting gun on ‘green’ lending, with a number of institutions announcing plans for ‘green’ mortgages and loans. Suddenly, the three mainstays of environmentally-friendly lending, Norwich & Peterborough Building Society, the Co-operative Bank and Ecology Building Society, were joined by the likes of Yorkshire Building Society, Abbey and, perhaps most notably, HBOS.
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Mainstream
So the question you have to ask is, have ‘green’ mortgages now broken through into mainstream lending?
Often when the likes of Abbey and HBOS – two of the biggest players in the mortgage market – commit to an idea, logic dictates other lenders will start to evaluate the marketplace. One maxim which often crops up is that when Halifax does something, the rest of the market will follow.
Paul Fincham, senior media relations executive at HBOS, believes it will on this occasion as well. “I think the Chancellor’s comments show the important role lenders have to play in making this type of finance available. There is a whole variety of ‘green’ mortgages and while there are only a few players now, we expect the market to open up.”
His argument is shared by David Anderson, chief executive of the Co-operative Bank. He welcomes more competition in the market and believes that ‘green’ mortgage loans will become the norm in the next few years.
“We are convinced that ‘green’ mortgages will be the most common form of home loan in the future and that is why we are working on several features that will make our range even more eco-friendly.”
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Scepticism
However, despite the initial trumpeting following the Budget, many within the industry are sceptical as to the impact ‘green’ mortgages will make. Ray Boulger, senior technical manager at John Charcol, believes lenders’ hearts are not in it and similar government initiatives in the market have fallen by the wayside.
“Some lenders will offer a ‘green’ mortgage, but there is no point in reinventing the wheel. I expect most ‘green’ mortgages to simply involve adding a token feature or putting a marketing spin on an existing product. Most ‘green’ mortgages are likely to go the same way as CAT standard mortgages, which most lenders quietly dropped because sales were so minimal.”
Even those already established within the market have their concerns. Jenny Irwin, marketing manager at the Ecology Building Society, says:
“We have been lending in this area for a long time and it is nice to get it recognised and see it brought into the mainstream. However, we will have to see the details as it is almost like it is jumping on a bandwagon to get some free publicity. We will have to wait and see what these lenders actually do.”
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However, for Linda Will, managing director at Accord Mortgages, the issue is pure economics.
“For the vast majority, when they think about a mortgage, they are concerned about whether they can get one and whether they can borrow enough. Especially with the costs now of buying a home, anything extra on top is not going to work. I think everyone wants to save the planet but if it’s going to cost them a penny more then they aren’t going to bother.”
Therefore, if ‘green’ mortgages aren’t to be consigned to the compost heap, they will need the backing of both lenders and borrowers. As with many green arguments, it is a case of whether consumers are willing to sacrifice a little bit to get the environmental benefits and the introduction of the Energy Performance Certificate should help to focus minds to achieve this. However, it is also up to lenders to make these ‘green’ products attractive to the borrower and not just use them as a marketing gimmick.
