Press
Mortgage Solutions 13th Nov 2006
European Parliament takes stock of mortgage credit report
The European Parliament is expected to take steps towards finalising its position on mortgage credit in the EU, when its own-initiative report is voted on by its plenary session this week.
Members of the European Parliament (MEPs) will be able to change, adopt or reject the report, which was adopted by the Committee on Economic and Monetary Affairs last month.
The report, a political statement of what the European Parliament would like to see in regard to mortgage credit in the EU, highlighted its recognition of the importance of advice. The report calls on the European Parliament to "recognise the beneficial role credit intermediaries, such as mortgage brokers, can play in helping customers access competitive mortgage credit from domestic and non-domestic lenders".
If the report is adopted, the European Parliament will urge the European Commission (ECM) to consult on an appropriate regulatory environment for intermediaries and prepare a proposal.
However, Chris Cummings, director general of the Association of Mortgage Intermediaries, warned with the UK mortgage market having already been through statutory regulation, there was a danger anything new out of Europe could result in a period of change and uncertainty as well as higher costs. He welcomed, however, the European Parliament's recognition of the role of intermediaries and the value of advice. James Carter, IFA at Virtue Financial, suggested legislation from the European Parliament could muddle things. He said: "We are highly regulated as it is."
According to the report, lenders were more likely to enter a pan-European market if national rules allowed them to offer early repayment terms at a price proportionate to costs, or to vary interest rates in line with market conditions and risk. It concluded restrictions were likely to impair development of the market in terms of funding, new products and lending to higher-risk borrowers.
John Purvis, MEP and rapporteur of the report, previously said, in an article for the European Mortgage Federation, any action at EU level to produce a single European market and integrated community initiatives, should not prevent consumers obtaining familiar mortgage products that are recognisable and fitting to their needs (Mortgage Solutions, p17, 9/10/06). Parvis also claimed a single, harmonising directive for European mortgage credit was not the way forward, but a market-led initiative could get results.
The report, to be voted on this week, supports Purvis' claim and recommends the ECM focuses on targeted measures offering the greatest benefits, encouraging market-led initiatives wherever possible.
Commenting, Paul Hunt, head of marketing at Platform, said when the FSA implemented regulation, it made it clear it did not want to restrict consumer choice and it was heartening the European Parliament shared this view and did not want to harm innovation. He added: "It is also good to see it recognises the importance intermediaries play in the market, as it is estimated over 60% of all mortgages sold in the UK are via intermediaries."
The European Commission, whose Green Paper on mortgage credit in the EU has been under discussion since July 2005, is planning to publish a White Paper on mortgage credit early next year.