Big banks jump on green bandwagon

Some banks are now offering discounted mortgages to people buying eco-friendly homes and Energy Star certified homes. The trend toward green living has finally caught the attention of the banking industry.

Banks have watched as consumers have made greener choices in everything from washing detergent and light bulbs to high-efficiency furnaces and solar energy panels. With consumers interested in greening their lives, most of Canada's major banks have seen the opportunity to offer "green mortgages," which offer homebuyers a discounted interest rate and other incentives to buy more environmentally sensitive houses or perform upgrades aimed at lowering their environmental footprint.

Consumers, especially first time buyers, are increasingly looking to green home upgrades to help the environment and lower the carrying costs of owning a new home.

According to surveys conducted by Leger Marketing, while Canadians are interested in lessening their impact on the environment, the decision to buy a "green home" is really being driven by saving cash, and more than 59 per cent of respondents cite financial savings as the main reason for making eco friendly upgrades and purchases. The results are not surprising, considering more than 51 per cent of survey respondents say utility costs are the biggest surprise financially when it comes to owning a home.

Having new windows, doors and a high-efficiency furnace can go a long way to help make those carrying costs more palatable, according to Leger, which found 92 per cent of Canadian respondents recognize the cost advantages of energy-efficient home upgrades.

It also found nearly half of all homebuyers plan to make investments in energy-efficient upgrades in the next year, especially with the anticipated extension of the federal government's ecoENERGY Retrofit program. The program allows Canadians to write off a portion of their green home renovations on their taxes.

The green trend isn't just infecting resale homebuyers. According to an EnerQuality Green Building survey released in November 2009, more than 40 per cent of Ontario homebuyers are willing to pay up to $10,000 more for a new green home, or a home that is Energy Star certified. It's almost double the 22 per cent of homebuyers who were willing to spend that amount of money in 2008.

While almost all of Canada's big banks are offering green mortgages, the loans aren't open to just anyone. Buyers must qualify for the green loan by proving that the house they are buying meets certain green energy standards, or that they will be completing certain green upgrades to the home shortly after moving in.

Incentives offered by the banks vary. Some will provide rebates equal to the cost of a home energy audit, which is around $300, and then a cash back incentive that can be used for green upgrades. Others offer discounts to posted mortgage rates.

Though wading through all these new options proves to be a daunting task, homeowners and those who are looking to make the move to a greener lifestyle have been diligent in getting all their goals in order with help from the banks and the useful information they provide.

Companies who are participating in this new wave of going green aim to make a considerable mark in lessening the disconcerting carbon footprint.