BoI offers ‘green mortgage’ discount

Bank of Ireland said its offer of a 0.2% discount for ‘green’ mortgage borrowers to upgrade their homes will incentivise homeowners to install energy insulation and help the fight against climate change.

Its ‘green mortgage interest rate’ is for borrowers taking out a fixed-rate mortgage, for up to 10 years, to buy or build an A-rated energy-efficient home, while a ‘green home improvement loan’ at a discounted, annual variable rate of 6.5%, for amounts from €2,000 to €65,000, will help people to install insulation or solar panels in their homes, the lender said.

The improvement loan covers loft insulation for floors, walls, and pipes, as well as boiler upgrades and other energy-related improvements.

The bank is also offering a ‘green’ discount on its small-business (SMEs) loans.

But the offer by the bank of fixed mortgage discounts comes at a time when markets are widely pricing-in the probability of interest rate cuts by the ECB in the coming months, which could help encourage Irish lenders to lower their home-loan and SME borrowing costs, widely criticised as among the highest in Europe.

And mortgage market expert Michael Dowling said that Irish lenders could do much more.

“Any reduction in interest rates has to be welcomed, even though the Bank of Ireland move is quite specific,” the mortgage broker said.

“But it is more symbolic for Bank of Ireland to have a ‘green’ agenda and all borrowers should have cheaper interest rates,” including standard variable rates, he said.

“It is only part of the picture and does not answer the question why all Irish mortgage borrowers are paying the highest costs in the eurozone.” Mr Dowling added.

Gavin Kelly, chief executive of Retail Ireland at Bank of Ireland, said: “Everyone has a part to play in addressing one of the most important issues of our time: climate change.

“Addressing this challenge means changing behaviour, and, as a leading financial services provider in Ireland, we can make a meaningful contribution to incentivising that change.”