Mortgage Overview
A mortgage is the biggest loan most people will take out in their lifetime. But just how is this loan funded?
Who else does your mortgage provider do business with? Might they also lend to big corporations involved in areas you don't approve of? Do they lend responsibly to their customers and offer assistance to those who fall into financial difficulty? Do they offer incentives to environmentally-sound projects?
If you're thinking of buying property or your existing mortgage is up for renewal, this section will help you find a green and ethical provider.
Find out about your current or prospective provider
What are the green and ethical options?
Find out about your current or prospective provider
Use the mortgage search to find out more about your current or prospective mortgage provider's green and ethical credentials. Key areas considered are responsibility toward customers, financial exclusion, equal opportunities, environment and also whether they have an ethical lending policy or guidelines in place.
Responsible lending
The importance of responsible lending cannot be overemphasized. The recent global economic downturn is often attributed to the 'sub prime crisis'. This refers to the granting of loans to people who are considered to be in higher risk categories - those more likely to default or who have a poor credit history, for example.
This type of lending is not problematic in itself - credit unions and community development finance institutions regularly lend to sub prime candidates.
Instead, irresponsible lending to customers in the sub prime category is the problem. In the build up to the crunch some financial institutions were lending 100% mortgages (and in some cases more) to people who would not be able to make their repayments in the long term.
Key questions to ask: Does your bank have responsible lending policies that ensure that its products are targeted in an appropriate manner? And does it provide advice or debt management services to customers who fall into financial difficulty?
What are the green and ethical options?
- Co-operative Bank: has a well-recognised ethical policy in place that governs all its lending decisions and products including mortgages. It also offers a specific Green Mortgage and re-mortgage product. Additionally it offers a reduced-rate loan to mortgage customers wishing to purchase and install energy efficient home technologies from an approved list.
- Ecology Building Society: has an 'ecological' lending policy which applies across all lending practices. It offers a number of green mortgage options.
- Norwich & Peterborough Building Society: offers a Green mortgage which plants 40 trees per mortgage and available for new homes with a Standard Assessment Procedure (SAP) rating of 100 or higher or to those looking to make their home more energy efficient. It also offers a Brown mortgage which includes a free energy survey and advice on making property energy efficient.
Your next steps
Check out our Next Steps Guide - Mortgages for suggestions on how to find the right green and ethical mortgage provider for you as well as the questions you should be asking your current or prospective provider.
Mortgage Search
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Mortgage Provider
MBNA Europe Bank Ltd
Green/Ethical Products
None – charity affinity cards are not considered green or ethical on their own.
Ethical Lending or Insurance
As a credit card provider MBNA does not ‘lend’ in the usual sense and therefore does not have an ethical lending policy. However, whether it provides credit in a responsible way and offers debt advice to its customers and supports financial education initiatives, is of key importance.
MBNA’s parent company, Bank of America, applies environmental criteria to its lending policy. It also has guidelines on lending within developing countries (environmental impact, cultural and social structures, and human rights) and applies the Equator Principles to project finance.
Responsible Lending
1. Credit Lending
MBNA offers unsecured credit only, though it directs potential mortgage customers to the provider First Union.
In terms of running credit checks, MBNA appears to rely solely on income-related information provided by the customer rather than using credit reference agencies.
No public data is available as to whether MBNA has a policy to avoid or prevent offering unrequested increases in credit limits to customers.
2. Debt Warning
MBNA offers the following generic warnings on its site:
- ‘Consolidating debts into one loan may cost more in the long term.’
- ‘Think carefully before securing other debts against your home.’
- ‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
The institution does not use the FSA Debt Test. This test is designed to help customers find out whether they have, or are likely to have, problems with borrowing. It also has tips on what to do if customers find themselves in difficulty.
3. Debt Management and Advice
MBNA says that ‘various repayment options’ can be discussed with their debt advisors. It also refers customers to external agencies including Consumer Credit Counselling Service (CCCS). No information regarding payment holidays for unsecured credit customers was found.
Financial Exclusion
MBNA Europe Bank Ltd does not offer any products to the financially excluded.
In terms of working with credit unions or other mutual organisations, it states that it has ‘made donations to Chester Credit Union over a number of years’.
The bank makes a number of access provisions, including statement in Braille, large print and audio. It also offers Typetalk facility to those with hearing problems.
Environment
Information was not found or provided regarding the company’s policy on the environment, especially energy efficiency and waste management, as it relates to its own operations.
However, MBNA Europe Bank Ltd adheres to Bank of America’s environmental commitments.
In 2007, Bank of America announced a $20 billion, 10-year initiative to address climate change by championing sustainable business practices in four key areas: lending, investments, products and services, and operations.
Carbon Neutral
No evidence of a pledge on total carbon neutrality was found, though the parent company has a target to reduce emissions from its business operations by 9% in 2009.
Equal Opportunities
The bank’s equal opportunities policy addresses our key issues of gender, race, disability and sexuality.
Women on the Board
The parent company, Bank of America, report that 25% of their board members are women (2008).
Voluntary Standards & Initiatives
Not by itself, but the parent company, Bank of America, is a signatory/member of a number of charters and initiatives including:
MBNA Europe Bank Ltd
- Credit Cards
- Insurance (‘Lifestyle Protect’, Identity and Card Protection)
- Mortgages (through partner First Union)
MBNA Europe Bank Ltd
MBNA Europe Bank Limited
PO Box 1004
Chester Business Park
Wrexham Road
Chester
CH4 9WW
