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An integrated EU mortgage market could not only improve competition and capital efficiency but also help labour mobility and retirement financing. In the meanwhile the Paper proves they are poorly integrated and points out the lack of cross-border lending, variation of products and procedures and incompatibility of fiscal and prudential conditions, especially in the retail mortgage market.
Funding is also fragmented due to legal, fiscal and regulatory obstacles. Mortgages are funded mostly by retail savings; less than 40% (although with growing tendency) via capital markets.
The Green Paper examines the potential benefits of further integration and focuses on four main areas: consumer protection, legal and fiscal issues, collateral and funding. Given the importance of the mortgage market (at the end of 2004, the value of outstanding residential mortgage loans represented about 40% of the EU GDP) and its high complexity, the Commission intends to publish a White Paper on the issue in 2007.