New EC mortgage directive has wrong focus

Published: December 19, 2007

A new European Commission (EC) decision not to recommend a directive on the European mortgage market has been welcomed by the Council of Mortgage Lenders (CML).

However, the CML has called on the commission to change its focus to promote cross-border shopping for mortgages.

Rather than harmonising consumer protection across Europe as a means to integrate mortgage markets, as was emphasised in the EC white paper, the CML highlighted the need for a removal of barriers that currently prevent financial institutions from operating in different member states.

Andrew Heywood, deputy head of policy at the CML, said: "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."

According to EC estimates from 2005, the value of mortgage integration to the European economy could total as much as 94.6 billion euros (£67.9 billion).