Green home loans boom

By Maria Slade

Albany woman Lyn Mayes wanted an environmentally friendly front door.

Interesting, but not out of the realms of possibility, one would have thought.

But "nobody understood what I was asking for. My builder didn't understand," Mayes says. In order to source her Forest Stewardship Certification (FSC) Canadian cedar front door she says she had to literally phone just about every supplier herself until she found one who knew about the FSC system of ensuring wood has been sustainably harvested.

Lyn Mayes' front door is a small point, but it's indicative of how behind the green eight-ball New Zealand is.

Westpac will soon become the first New Zealand bank to offer a 'green' home loan. When the product launches next March, it will be the Kiwi financial sector's debut in a market that has been gaining momentum overseas for years.

The Westpac green mortgage will be a reproduction of a loan it offers in Australia. When the customer takes out a home loan, they will receive a package of discounts on eco-friendly products for their home - anything from solar water heating systems and insulation to eco-lightbulbs.

It's one example of a burgeoning market for green financial products that is well established in countries such as the United Kingdom, the United States and Australia.

Dan Heywood, director of sustainable home developer Arhaus, says New Zealanders don't realise how far behind we are on such issues. He says the US may be the biggest polluter on the planet, "but in terms of the whole green movement and solar technology they're streets ahead."

Bendigo Bank was the first in Australia to write green mortgages and personal loans, and now offers 12 products. Bank executive Marnie Baker says it offers a half a per cent interest rate discount on mortgages for houses which meet the Australian five-star energy rating, and on loans to buy other environmentally-friendly products such as hybrid cars and double glazing.

She says it's a small but growing part of Bendigo's loan portfolio. Baker believes it's growing because people are increasingly in tune with environmental issues and have realised "that they can personally make a difference".

"Given what we're going through here in Australia with droughts, people are very, very aware." She says loans for water-saving initiatives such as grey water treatment systems are becoming popular.

One theory about the commercial advantages of green mortgages is that because the owner of an eco-home will be saving money on energy usage, they can afford to service a bigger home loan. Baker says while Bendigo is aware of this benefit, green loans are part of its overall sustainability agenda. It is currently building a new $100-million head office facility in Bendigo, which has become the first development in regional Australia to receive a 'green star rating' from the Green Building Council.

Westpac too says its move into green loans, or energy-efficient mortgages as they're known in the US, supports its position around sustainability. David Cunningham, general manager marketing and products, says: "This is really part of doing the same sort of thing in New Zealand."

He says a difference on this side of the Tasman is that the product will be aimed at all Westpac's home loan customers, while in Australia it's designed for first-time home buyers or those building or renovating. Cunningham says the bank is still talking to potential partners, but it hopes to be able to offer discounts of at least 10 per cent on environmentally-friendly home improvements. It would appear the rest of the New Zealand financial sector is blissfully unaware of the blossoming green loan trend. Herald on Sunday inquiries on the subject with at least one other mainstream bank and a major non-bank lender were met with blank stares.

However the sustainability movement is well up with the play. Peter Neilson, chief executive of the New Zealand Business Council for Sustainable Development, says green mortgages make financial sense for banks. One driver is the fact that the early adopters of green home building techniques tend to have a higher net worth, and are likely to be the holders of the property for a long time. So he says if the banks want to position themselves to attract good, loyal customers, this is a great group to target.

Secondly as global warming becomes more and more of an issue, eco-friendly buildings are likely to retain their value better over time. "In other words, it's an inherently better security," says Neilson.

However Peter Neilson says there are fundamental reasons why green lending hasn't become established here yet. Our energy costs are much lower than in other developed nations, and thus New Zealanders haven't had the same incentives to focus on building energy-efficient homes. Aside from some metropolitan areas such as Auckland, we also don't pay for water usage (other than through general rates) and so there's no drive to save water here.

Neilson says our small population is also a factor. Green clients are a small proportion of overseas financial institutions' customer base to date. While two per cent may be a lot of people in a larger country, it's a number hardly worth bothering about here. He says government assistance for putting in things such as solar water heating systems does exist here "but you'd be challenged to find it".

It's a situation Lyn Mayes can testify to. The English-born consultant doesn't describe herself as overly green, but she does drive a Toyota Prius hybrid car, and she wanted her new Albany home to be as easy on the environment as possible. This has involved elements such as high-spec insulation, environmental choice paint, and solar water heating.

Mayes looked into the possibility of government grants but says it wasn't made easy. She says just getting the necessary building consents took long enough. "It seemed to me that I would end up spending more time trying to organise it and losing working time than I was actually going to achieve in getting a grant.

"I actually found that it seemed to take us longer to get our building consents than pretty much any of the other developments (around) here. My builder was convinced it was because of the solar panels and everything."

Lyn Mayes says her Kiwi workmen didn't really comprehend what she was trying to do. She says they kept attempting to save her money, and she would have to reiterate why she wanted to pay $6000 for solar panels when a standard hot water system would have been half the cost. Hers was the first home her builder had ever put solar panels into. "I didn't think that was particularly innovative, I just thought it was fairly normal now, but it's not."

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