The Commission has decided not to recommend a mortgage directive without further study. However, the CML continues to believe that the best way to foster greater integration of EU mortgage markets at this stage is through the removal of barriers to business rather than through harmonising consumer protection measures.
At present, there is still almost no cross-border shopping for mortgages, as the Commission acknowledges. For the foreseeable future, consumers appear likely to prefer to deal with an institution based in their own country. So the best way of promoting a greater degree of integration would be to make it easier for financial institutions to operate in different member states. This is still difficult and costly for lenders when systems of property ownership, land registration, and the legal systems that apply to the mortgage process are very different across Europe.
Against this backdrop, the CML believes there is a long way to go before 'cross-border' shopping becomes likely. As a result, the CML continues to urge the Commission not to focus on harmonising consumer protection measures at this stage, as there is no evidence that this would make any difference in practice to the extent of cross-border lending that would occur.
CML deputy head of policy Andrew Heywood commented: “The Commission has rightly postponed a decision on a mortgages directive. We hope that it will finally come to realise that a directive would not add value to its attempts to promote greater integration across EU mortgage markets and could harm market confidence at a difficult time.
“The white paper contains some helpful proposals to improve the infrastructure of mortgage lending in relation to matters such as access to credit databases and valuation, but the Commission still seems tempted to focus on harmonising consumer protection, which will make no practical difference to opening up markets unless and until the structural barriers to cross-border lending are dealt with.
“We are particularly concerned that imposing further constraints on lenders will simply increase costs at a time of increased market uncertainty and reduce lenders’ appetite for cross-border lending with no tangible benefits for consumers.”
