European Commissioner for Internal Market and
Today we publish our Green Paper on Mortgage Credit in the EU, launching a wide-ranging public consultation on whether and how the Commission should propose action in this area.
A home is the single largest purchase made by most EU citizens. It represents the single largest debt and potentially the single largest asset for most families in Europe. The EU mortgage market reflects this – it is substantial and growing. Figures for the end of 2003 show that outstanding residential mortgage balances stand at about 4.2 trillion Euro, which is equivalent to about 40% of EU GDP.
Is the internal market working well here, or is there scope for Commission action to make the EU mortgage market more competitive and to increase choice and value for consumers? That is what today’s Green Paper is designed to help us to assess. It is a central part of the Commission’s on-going efforts to bring the benefits of the internal market in financial services to EU consumers. It has to be seen in conjunction with the asset management Green Paper published last week and the proposal for a directive on payments which I intend to table in the Autumn.
Mortgages are a complex subject, involving many areas of law and policy. Our Green Paper reflects this – putting out for consultation options in all of these important areas, including consumer protection and the funding of mortgage credit. For example, we ask whether choice and value would be enhanced by EU standards for the information to be given to consumers shopping around for mortgages, the advice provided on mortgage deals and the fees charged to consumers wanting to switch mortgage loans. In addition, we explore ways in which lenders based in one Member State, can access information on potential borrowers and properties in other Member States, to encourage them to undertake mortgage business across borders, thereby increasing choice and competition in the EU mortgage market. These are just some of the examples of the variety of issues relevant to the development of the internal market for mortgages, addressed in this Green Paper.
In considering how to develop our policy on mortgages, we have ensured that we have solid input from a wide variety of stakeholders and experts at all stages. The Green Paper takes into account the very valuable report from December 2004 of the Forum Group of experts on mortgage credit, which we created to advise us on ways to develop the EU market in mortgages. We have also commissioned a study on the general costs and benefits of integrating the EU market for mortgages. The results will be available on our website next month, at the beginning of the Green Paper consultation period. The end of this consultation will be marked by a Hearing, to be held in December of this year, which will provide a forum for the presentation and discussion of the consultation responses.
We will study closely all the responses to the Green Paper before deciding whether Commission action in the EU mortgage market can add value and, if so, what form that action should take. As is our approach in all areas of our work, we will propose measures from next year onwards only if the consultation demonstrates that there is a clear business case for action. The benefits of any policy measure to improve the internal market for mortgages should outweigh the anticipated costs of this measure, and these benefits should be experienced by EU consumers and businesses alike.
We will decide upon this in due course. Now is the time for reflection and debate.