European work on mortgages
The European Commission remains interested in the potential for improving integration in retail financial services markets. For example, the Commission will look at ways to make cross-border use of bank accounts more consumer friendly and to break down barriers so customers can shop around all over Europe for the best savings plans, mortgages, insurance and pensions. Within this it has identified mortgages as a priority area.
Latest updates
September 2008
The Commission published a White Paper on Mortgage Credit in December 2007. The White Paper summarises the Commission’s considerations to date on mortgages, and presents the conclusions reached so far. The White Paper outlined a 'package' of measures that the Commission believes has the potential to contribute to the greater integration of EU mortgage markets.
Importantly, the White Paper does not make a case for legislation. Instead, further, rigorous impact assessment (including quantitative cost-benefit analysis) is proposed. This will include an assessment of whether legislation would be the best approach to subjects such as pre-contractual information, early repayment, responsible lending, high level advice standards and the APRC. A study on these issues is expected to be announced shortly.
Other issues on which further impact assessment work will be carried out include foreclosure procedures, land registers and valuation approaches. The White Paper identifies scope for a new Recommendation on these topics.
There will also be further consideration of funding issues by the Commission, following the report by the Mortgage Funding Expert Group. This may include the creation of an Expert Group on Securitisation. However, further work in this area will be closely linked with recent ECOFIN (Economic and Financial Affairs Council) initiatives on market stability. Another area where an Expert Group is likely, is on the subject of credit histories. The case for enhancing non-discriminatory access to creditworthiness data has been identified as an issue in Commission work on mortgages, consumer credit and the banking sector.
Further research is a recurring theme of the White Paper. The Green Paper on Retail Financial Services announced studies on the role and regulation of credit intermediaries, non-credit institutions and equity release. In addition to these, the Commission says it will investigate tying-in and other unfair practices that may impact on customer mobility. One further piece of research is planned, in 2010, which will consider interest rate restrictions having particular regard to the impact these might have on diversity and cross-border business.
Key EU publications on mortgages
The Commission published an EU White Paper on Mortgage Credit on 19 December 2007. This followed a Green Paper in July 2005 seeking views from all stakeholders on the case for intervention. The Green Paper was published along with London Economics' report on the costs and benefits of integration of EU mortgage markets.
Why is the European Commission interested?
The Commission's concern is that national markets are not integrated and the full range of mortgage products is not available in each member state. So consumers may face a reduced choice of products or even be excluded from their national mortgage market altogether.
What is the European Commission trying to achieve?
The Commission's aim is for competitive and efficient EU mortgage credit markets. It wants to achieve this by:
- facilitating the cross-border supply and funding of mortgages;
- increasing product diversity;
- improving consumer confidence; and
- facilitating customer mobility.
Who does this affect?
Anyone involved in the UK mortgage market may be significantly affected by this work; whether a consumer, a mortgage intermediary, a mortgage lender, or a firm involved in mortgage funding.
These pages will help you to understand how the work has progressed and how we, along with HM Treasury, are aiming to influence the outcome.
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