Sharon Bowles who represents South East England in the European Parliament has tabled an amendment to the current EU directive on mortgages calling for clear, concise information to be provided to first-time buyers.
But Ray Boulger, senior technical director at John Charcol, said: “Sounds like another example of European bureaucracy gone mad. The reality is that it clearly makes sense for first-time buyers to be provided with relevant information in relation to their mortgage.
“But on the basis that the whole point of this directive is to harmonise mortgages throughout the EU, I presume Bowles wants mortgage providers to provide details for first-time buyers buying in all 27 countries in all 27 different languages so they can make a decision as to which country to buy in. That would be the logic of the European harmonisation.
“I’m obviously being facetious here. There is a difference between what is sensible for lenders to do, which is to provide buyers with information and a lot of lenders and brokers of course do that. But what is not sensible is for the information that’s to be provided to be dictated by a Eurocrat who probably has no idea about the UK property market.
“This really exemplifies the whole problem with EU trying to harmonise mortgage regulation. What is appropriate for the UK is very different to what’s appropriate to other countries. In the UK we already have a higher degree of mortgage regulation than anywhere else in the UK. The whole concept of trying to harmonise the process is almost as flawed as the concept of the Euro.”
And Andrew Montlake, director at Coreco, said: “It’s not the daftest suggestion in the world. It really depends on the length and scope of the brochure. Bombarding people with too much documentation can actually have the reverse effect and just confuse people further.
“However for first-time buyers, it’s something that brokers already do very well. It’s talk them through the house buying process and what things they need to look out for etc etc and a lot of brokers actually have things like a guide to buying a home.
“It’s something that a lot of brokers do anyway, it’s just general good practice. Most of the information is already out there. I’ve just written a guide because our introducer’s wanted it.
“It really depends on what is the content of this new document because it could be something that confuses people further and adds to regulatory costs etc.”
Bowles, chair of the European Parliament’s Economic and Monetary Affairs Committee, said: “I believe that all mortgage lenders and intermediaries should be obliged to put a standard brochure for first-time buyers in their hands, which would give basic definitions of all the key elements of mortgage lending, as well as pointing to where to go for more help.”
The European mortgage directive already says it will introduce a European Standardised Information Sheet aimed to provide an illustration of a mortgage’s costs and features in order to help consumers compare mortgages and shop around while the Financial Services Authority currently requires all involved in mortgage lending to issue a Key Features Information document to those enquiring about mortgages.
