Credit crunch fails to harm 'green' mortgage market

Green mortgages enjoyed a flourishing 2007, the Ecology Building Society revealed, despite market jitters.

Suggestions many people would shun ethical or sustainable mortgages in favour of more competitive rates in a climate of concern over interest rates, proved wrong the building society's figures reveal.

Although Ecology Building Society said it could not speak for the rest of the green market, it revealed having a "phenomenal" year in 2007.

Its claims came as online mortgage firm mform unveiled its "Green Leaf" system to enable eco-aware borrowers to spot deals from firms committed to reducing their environmental impact, showing there is a clear demand for green mortgages.

Ecology said the fact it is a mutual society, borrowing funds from savers' investments and not external sources, meant it did not feel the effects of the credit crunch.

However, Jenny Irwin, marketing director for Ecology, believes the demand for green products has had a strong influence too.

The fact its mortgages have a low SVR has also made a difference to product uptake, Ms Irwin believes.

She said: "Fixed rates appear to be losing their appeal as lenders are either withdrawing their fixed-rate products or are increasing interest rates and/or fees due to the instability in the funding market.

"This is making variable rates look more attractive and our record year in 2007 just goes to prove that more and more people are taking out green mortgages."

Ms Irwin added: "Looking at our business to date the success we had in 2007 looks like it will continue in 2008."

Green mortgages are characterised by the fact the lenders offering the package make contributions to charities supporting the environment. Some lenders will only finance homes that are sustainable or environmentally sound.