18 December 2007

Commission White Paper on Mortgage Credit

The Commission published its White Paper on the Integration of EU Mortgage Markets. The White Paper includes a 'package' of measures, but does not propose a directive. The package foresees improvements in the areas of cross-border supply, product diversity, consumer empowerment and customer mobility.

Evidence shows that the single market for residential mortgages is far from integrated. The potential benefits of removing the barriers could, according to some estimates, reduce the interest payable on a EUR 100 000 mortgage loan by as much as EUR 470 per year.

The Commission seeks to develop integration in EU mortgage markets by:

- facilitating the cross-border supply and funding of mortgage credit by removing the barriers and reducing the costs of engaging in cross-border activity;

- increasing the diversity of products that meet consumers' needs by removing barriers to the distribution and sale of products, including innovative and new products across Europe;

- improving consumer confidence by ensuring that consumers are empowered to make their own decisions and benefit from a high level of protection;

- facilitating customer mobility by ensuring that consumers wishing to change mortgage lenders are not prevented or dissuaded from doing so by the presence of either legal or unjustifiable economic barriers.

The White Paper also draws on the initial lessons that can already be learnt from the recent turbulence in financial markets.

Non-legislative solutions are announced in particular in the field of land registration, property valuation, and forced sales procedures. The Commission does not rule out proposing future legislative measures if they are deemed necessary.

However, until a rigorous impact assessment, including a quantitative cost-benefit analysis, has been undertaken and further consultation with all stakeholders have been concluded, the Commission considers that it would be premature to decide on whether a legislative approach would at this stage deliver the necessary value added.

Press release

White Paper

FAQ

Impact Assessment

Executive Summary

Annex 1: Mortgage market characteristics

Annex 2: Process

Annex 3: Impact assessment on specific issues

Opinion of the Impact Assessment Board

© Graham Bishop