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IP/05/971

Brussels, 19 July 2005

Financial services: Commission launches consultation on action in the EU mortgage market

The European Commission today publishes its Green Paper on Mortgage Credit in the EU. The Green Paper examines the case for Commission action in EU mortgage credit market. Can Commission action make these markets more efficient and competitive, leading to more choice and better value for EU consumers?

Internal Market and Services Commissioner Charlie McCreevy said: “A home is the biggest purchase most people make in their lifetime and the mortgage credit markets are a very significant part of the EU economy. More cross-border activity and competition in the EU mortgage market could increase choice, reduce costs and leave more money in people's pockets at the end of the month. Today we are launching a consultation to assess whether Commission action can help to bring about these improvements in choice and value in the EU mortgage market. I strongly encourage people to respond - we will listen, and if there prove to be areas where we should act, we will not hesitate to do so.”

At the end of 2003, outstanding residential loans in the EU stood at about 44% of EU GDP. It would appear that most of these loans were taken out with national and local lenders. So far, consumers appear reluctant to do business with foreign lenders for loans of this size and importance. Equally, many foreign lenders have been slow to take up the opportunity offered by the Internal Market to do business in Member States other than those in which they are based. Reasons for this, as pointed out by the report of the Forum Group on Mortgage Credit[1], include differences in marketing and comparing products across national borders, differences in national legal rules on mortgage products and practical difficulties such as the different ways of assessing potential borrowers’ credit-worthiness and of carrying out property valuations across the EU.

The Green Paper looks at whether and how Commission action to develop the Internal Market in mortgages could provide concrete benefits for EU consumers. For example, could Commission action lead to increased choice of mortgage and related products? How should consumers best be advised about mortgage offers to help them make the right decision for them? Are there benefits in having EU standards for information about mortgages, for rules on calculating interest and for fees for switching mortgage loans? How can lenders’ access to information in other countries on potential borrowers’ credit histories, property valuations and land registers be improved, to encourage them to do more cross-border business? Should we encourage more cross-border activity in mortgage loans? Finally, is there scope for a new kind of mortgage lender, that is not a bank and therefore not subject to all banking rules, to increase competition in these markets?
Stakeholders are invited to comment by 30 November 2005 on the Green Paper, which is available at:

http://ec.europa.eu/internal_market/finservices-retail/home-loans/index_en.htm

Responses should be sent by 30 November 2005 to:

markt-mortgage-consultation@ec.europa.eu

All views received will be carefully considered, discussed in a public hearing after the end of the consultation period, and used to develop any future Commission policy.

Also to be used in developing policy is a study on the costs and benefits of further integration of the EU market for mortgages, to be published August 2005 on the above website.


[1] The Forum Group was created by the Commission to provide advice on developing an EU mortgage market. Further details and the Forum Group report can be found at http://ec.europa.eu/internal_market/finservices-retail/home-loans/index_en.htm#mortgage


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