Chapter 1: What is the main topic discussed in this episode?
The Clare Byrne Show on Newstalk. With Aviva Insurance.
First up today, there has been an uptick in green loans being drawn down. Householders are rushing to beat the expected energy price rises in the coming months. But given that it's May now and there's a huge demand for building labour, is it possible to retrofit your home before the winter?
Well, Charlie Weston is personal finance editor with the Irish Independent and he has the details on the finance side. And we'll also talk in a moment to Ciarán McCarthy, Engineer and Director of KMC Homes in Cork. But Charlie, I'll start with you first. There is a bit of a run on these types of loans, is there?
Chapter 2: What is causing the increase in green loans?
There is, there is, Clare. Certainly the banks, and I had separate figures from the credit unions, they're showing a big increase in what's called green loans. Now, these are essentially loans to upgrade the energy efficiency of your home or to buy an EV unit. The banks are reporting a 26% increase this year compared with last year in the number of these green loans taken out.
And they're big, chunky loans. They tend to be twice the size of a standard loan. You're talking, according to the Banking and Payments Federation, up to €23,000. And a number of credit unions have come together, 34 of them around the country, and they formed a group called Greenify, and they're offering a standardised green loan with a rate of 5.5% for consumers, which is pretty good.
And that, again, is for home efficiencies, improvements, works, or EVs. Now, all of this tallies with figures I had a while ago there, a few weeks ago, Claire, from the Department of Energy, Minister Dara O'Brien's department, showing that in the years so far, there has been a doubling increase
in the number of people processed for a grant from Sustainable Energy Ireland to do the likes of heat attic installation, cavity wall installation, etc. Something like 29,000 applications were processed. And, you know, in the budget, they did increase the amount of money for this kind of these SEI grants under the target of 73,000 houses to be upgraded this year.
So people are likely spending this money that they're borrowing, the 20,000 or thereabouts themselves, and getting a grant on top of that, are they?
Yeah, I mean, yeah, they'll be getting a grant if they're doing the work. I mean, the builders will often organise that for you. But, you know, they need money as well. So you're talking about EVs in there as well. So that's what brings it way up. Some of this work can be quite expensive, you know, particularly a heat pump, you're talking €10,000 to €15,000.
Now, you will get a grant of up to €6,500. Doors and windows is another popular one. There's a grant for that now, and it wasn't previously. If you get them both done. Cavity wall installation can be expensive. So, you know, these are big jobs. People can't move either, so it's not like you could just...
If you need to move to a bigger home, you can buy a brand new high building energy rated home and that sorts you out. But, you know, there is a bit of an issue around all of this as well. There's very interesting research done by Trinity College recently showing that there's a green divide.
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Chapter 3: How significant is the rise in green loan applications?
EVs, solar panels, heat pumps, they're concentrated in affluent areas. So, you know, you get this east-west urban-rural divide where the clean tech stuff is bought in the well-off areas. And I personally have a real problem with people getting grants to buy big four by four EVs, which are essentially just vanity purchases. But that's the way it is.
So, yeah, there's a warmer home scheme which will fund you if you're low income. That's right. People don't know about it, Clare. That's the problem.
Really? But a lot of people, I think, are availing of it too. But I mean, and I get what you're saying about the divide, because you have to be able to afford to borrow the money or pay for it up front in order to get the grant to fill in the gaps for you. So it's clear to see why there is a divide there.
Do you think, though, that this is a reaction to what people are expecting to happen in the autumn and the winter?
Chapter 4: What types of home improvements qualify for green loans?
In that, even if Donald Trump sorts this Iran stuff out, Tonight, we are going to have a big lift in our energy prices in the winter.
Yeah, I think people can see it already. You've had Dara O'Brien, the Minister for Energy, warning of price rises between 4% and 9%. We saw last week prepay power, which had 240,000 customers, announcing a price rise in June. That's the first during this current crisis. We've had various warnings from various experts, including the head of the international cell.
Energy Agency warning that we're in an energy crisis that's worse since the 70s. And, you know, so people can see that coming. So what I'm hearing is a lot of people who maybe were putting this on their long finger. They were talking about, they were thinking about solar panels, for example. And this has just prompted them into action. They've now decided, okay, like it could be a rough winter.
We're likely to get increases. There's a general cost of leaving the issue here. And so if you're lucky enough to be able to afford to borrow, if you can manage it on top of mortgage payments, you may have car repayments. If you can take on some debt as well, And you can get it at a low rate and a grant. People are saying, well, maybe now is the time to do it.
So it is kind of, I think it's forcing the issue for a lot of people at the moment, Clare.
Well, we wanted to find out whether it is possible to get the work done before the winter, which is why we've invited Ciarán McCarthy, Engineer and Director of KMC Homes in Cork, to talk to us. Good morning, Ciarán.
Good morning, Clare.
You busy? Do you agree that a lot of people now are looking at getting this retrofitting work done because of what might be ahead?
Yeah, there's a few strands to that actually. Because I know when the Ukraine war started, there was a massive surge, particularly in solar PV. And you have a similar massive surge again, particularly with solar PV now. And a lot of this is down to kind of the concept of energy security. People see what's happening with gas and oil.
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Chapter 5: How are grants influencing home retrofitting decisions?
I think that's a bit of a no-brainer. 750,000 people out there have oil-fired homes. 1,000 litres is up about 500 euros already, and that went up very fast. We have the most expensive electricity in Europe, as I was reporting yesterday.
If you have an oil-fired home with expensive electricity, it just seems to me like if you can do anything at all to increase the insulation, the energy efficiency of your home, and you can afford to do it, or you can apply for the warmer home scheme, Really, you know, you really should be thinking about it would be my advice.
Ciarán, you didn't notice any slowdown in people looking at doing retrofitting after the Tánaiste said that they would look at increased grants for things like heat pumps. And I think he mentioned EVs as well, which mightn't be strictly relevant, but I suppose opening the door to there being a lift in any sort of grant aid might change the calculation for some people.
Not in any major way. See, there's a few other things that kind of factor into all this as well. Like there's the new windows grant, the single measure windows grant. So there's an awful lot of people now reconsidering their windows. Now, some people, it might be just one window and you can't get a grant for just one window if you've halted your window.
So there's a lot of people in that bracket as well. But there's a lot of people now considering getting their windows done as a single measure. So that's a new grant now.
The other thing is like even when you like when you look at interest rates, I mean, with all the with the well, with the an ebbing level or with an increasing level of inflation coming at us, some people are starting to think, well, interest rates might tick up. Maybe I should fix my mortgage. And there's You get better interest rates for better BERs in your house.
So some people are going, maybe I should just get the improvement done, the BER improvement by getting a deep rate of it done in my house so that now that I'm going to fix my interest rate to lock it in instead of dealing with inflation. You'll get a better rate. You'll get a better interest rate anyway. So that's feeding into it as well.
And then, of course, when you look at the EVs then, I mean, I have an electric car. I know when everyone was, when we were having all the difficulties with the oil shutdown or whatever, and not being able to get fuel at stations, you know, there's a certain uptick in EVs and that's noted as well, you know.
On the labour front though, Ciarán, what is happening there? Because clearly we know the job of work that has to be done nationally when it comes to retrofit. Even Charlie reminding us about all of the people whose houses are heated using oil. I mean, strictly speaking, all of those people should be moving away from oil given the situation that we're in with fossil fuels.
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