Brussels, 19 July 2005
Why is the Commission launching this consultation?
Mortgage credit is a complex product, involving many areas of law and policy, and mortgage credit markets are a significant aspect of the EU economy. Accordingly, the Commission has been careful to undertake all appropriate consultation and assessment before considering proposing any action.
Why are the Green Paper and the costs and benefits study not being published at the same time?
The Commission has initiated a 4 stage assessment of the business case for Community action in the EU residential mortgage credit markets:
The Green Paper and the costs and benefits study are two separate aspects of this assessment. The Green Paper is an examination of the main areas of mortgage credit activity relevant to consideration of further integration of this market. The study is an assessment of the general costs and benefits of further integration of this market. The study will, in any event, be made available in the course of next month, at the start of the consultation period on the Green Paper.
Does the Green Paper propose any concrete measures?
The Green Paper puts forward the Commission’s initial reflections on the main areas of mortgage credit activity relevant to consideration of further integration of this market, including, in particular, consideration of the recommendations of the Forum Group on Mortgage Credit to develop an EU market for mortgages. No decisions on whether any action will be proposed, never mind on the nature of that action, will be made until after the consultation on the Green Paper and the conclusion of the 4 stage assessment of the business case for Community action in the EU mortgage credit market.
When will the Commission propose action?
The Commission will consider if it is appropriate to propose action and if so the nature of that action, only once the 4 stage business case assessment is complete, that is, after the Hearing marking the end of the consultation on this Green Paper. Thereafter, action will be proposed only if the consultation has demonstrated that there is a business case for action, i.e., that the perceived benefits of any proposed action outweigh the anticipated costs.
As the level of cross-border activity is so low – 1% of all EU residential mortgage activity - is it worth the Commission exploring this area?
It is true that the level of cross-border activity, as represented by consumer seeking loans from lenders in other countries, is low. Of course, there is the potential for this to increase under any measures to promote integration. More importantly, there is the potential for increased targeting by lenders of consumers in other Member States. Thus the Commission considers that greater integration of the EU mortgage credit market can be measured by and demonstrated by greater across-border activity by lenders, through establishment in other Member States, through use of the freedom to provide services in other Member States and more specifically, through use of intermediaries to market their products in other Member States. Integration can also be evidenced by mergers with and acquisitions of lenders in other Member States, and indeed by more pan-European activity in the secondary market for mortgage loan funding.
Does the Commission think that the EU mortgage market is not competitive?
EU national mortgage credit markets vary significantly in the nature and variety of mortgage credit deals on offer. The Commission has not undertaken a review of their relative levels of competitiveness. The Commission is assessing whether any action it can take could make these markets more competitive and efficient generally, thereby increasing choice and value for EU consumers.
Does the Commission think that EU consumers are getting a bad deal on their mortgages?
The nature of and variety of mortgage loans vary in national markets, influenced by local conditions and preferences. The Commission is assessing whether any action it could propose would have the potential to increase choice and value across the board for EU consumers, thereby ensuring that they can get a better deal.
Is the Commission concerned about over-indebtedness?
The Commission is well aware of the wider ramifications of mortgage credit policy on housing and social issues generally. Indeed, the Commission has initiated measures in this area, for example through the Open Method of Cooperation (OMC) involving poverty and social exclusion measures.
Will the Commission propose harmonisation?
At this stage it is too early to say if the Commission will propose any action, never mind to make predictions on what that action will be. We have to await the outcome of the consultation. If action is to be proposed, all possible solutions will be considered, not only legislative ones.
What is the future of the Code of Conduct?
Under the Recommendation endorsing the Code of Conduct, the Commission has undertaken to review its operation. It has already launched this review. The Green Paper’s coverage of the issue of information provision in general and the role of the Code in particular, is a continuation of that review. Decisions on the Code will be made, as will decisions on all areas of mortgage policy, after the conclusion of the Green Paper consultation and of the business case assessment of the case for Commission proposal for action in the EU mortgage credit market.
Is the Commission planning to introduce a European Mortgage (deed)?
The Commission is examining a range of initiatives which could facilitate cross-border mortgage credit activity, in a way that could make the EU mortgage credit market more efficient and competitive. The European Mortgage deed, or the Euromortgage as it has come to be known, is a mechanism for constructing the mortgage deed which is said to be able to facilitate cross-border mortgage credit activity. Its potential to do so is being assessed.
Does the Commission favour particular mortgage funding systems, products or institutions?
The Commission does not favour particular funding systems/products or institutions. Any action it may propose in the future will be intended to increase competition and efficiency generally in the EU mortgage credit market.
Will any future Commission action in this area lead more requirements for financial services providers?
At this stage, it is too early to indicate whether any action will be proposed by the Commission and, if so, what form that action can take. That said, the Commission is committed to ‘Better Regulation’ as demonstrated in its recent Communication on this subject. In addition, the Green Paper on Financial Services Policy (2005-2010) has proposed a rationalisation of requirements in financial services instruments. Any future proposals in the area of mortgage credit will be fully in line with the principles expressed in these initiatives.
 This report can be
 This study will be
published on the DG Internal Market and Services website in
 For details on the Commission’s policy on poverty and social exclusion see http://ec.europa.eu/employment_social/social_inclusion/index_en.htm
 C (2001) 477. Voluntary Code of Conduct on Pre-Contractual Information for Home Loans.
 Monitoring the Uptake
and Effectiveness of the Voluntary Code of Conduct on Pre-Contractual
Information for Home Loans, Institute for Financial Services, 2003.
 COM (2005) 97 ‘Better Regulation for Growth and Jobs in the European Union’.
 COM (2005) 177.