Mortgage News
EC ponders mortgage rule change
The European Commission is considering new regulation which would give prospective borrowers a compulsory 10-day ‘cooling off’ period for ‘reflection’ when applying for a mortgage.
It believes this would encourage more people to shop around before committing themselves to a particular lender and deal.
Under the new legislation, borrowers would also be encouraged to consider mortgage providers from other countries.
The EC is considering the move as part of a mortgage credit directive to be introduced next year, which aims to standardise European mortgage markets and encourage cross-border lending.
However, the Council of Mortgage Lenders (CML) said such regulation would be pointless for the UK market because the majority of homeloans are arranged by intermediaries.
However, with average loans in the French market, for example, priced far lower than UK home loans, foreign lenders could offer uncomfortable levels of competition for UK lenders.
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Over 60% of mortgages taken out in the UK last year were placed by mortgage brokers, according to the Intermediary Mortgage Lenders Association.
The CML believes that all of the crucial elements of the proposed European Standardised Information Sheet for mortgage credit (ESIS) is already covered in the UK when borrowers are given a Key Facts Illustration (KFI).
The CML said: “If the ESIS is now made a prescribed requirement across Europe, this will require amendments to, or replace, the KFI.
“This would have significant business costs but no obvious benefit to UK consumers as the information in each is broadly the same although ordered differently.”