Having attended the European Mortgage Federation Annual Conference in Brussels in mid November 2010 it is clear that the Commission is pushing ahead very quickly with mortgage regulation.
It’s still not totally clear what the proposed recommended rules will be but there is no doubt the rules will focus on responsible lending, not just in the context of lenders but also brokers, or credit intermediaries as they are referred to in other parts of Europe. In the UK the FSA has completed its Mortgage Market Review and is already starting to declare its view on how responsible lending regulation will be shaped. So the question is: Who will put their head above the parapet and issue the new rules first?
Popular belief maintains that the UK is likely to hold off any major announcements until it knows where Europe will be making amends and introductions, so as to ensure its own proposals are aligned as closely as possible with the new EU directives. But questions remain over whether the UK should even be looking to introduce new restrictions to this already struggling market.
Many mortgage providers and those in the house building industry believe that possible proposed legislation could be too limiting, and first time buyers and those on lower incomes will again be the hardest hit. But what about the Government’s commitment to responsible lending and protecting consumers from living with an unmanageable level of debt?
As we know responsible lending is the key factor in the introduction of new mortgage legislation, but this must be balanced carefully with existing marketplace restrictions to ensure it does not go too far. The last thing the market needs in the current climate is to turn away more customers and lose further consumer confidence.
So who will move first on further regulation of the mortgage industry? My view is that it will be a close run race, as both in the UK and in Brussels there is a strong political will to show steps have been taken to ensure lending is seen as more responsible in the future. The mortgage industry therefore needs to maintain its activity in Brussels and the UK to make sure its argument of over regulation is heard and changes are minimised
Neil Munroe is external affairs director at credit reference agency Equifax
