After cheap mortgages had fuelled housing bubbles, notably in the United States, Spain and Ireland, the European Commission proposed legislation in 2011 that sought to impose EU-wide standards on mortgage providers, while also opening up largely national markets to greater competition.
The insurance industry complained that the proposal, which was discussed for almost a decade before it was finally published, placed too much emphasis on consumer protection. MEPs and member states were concerned that the proposal ignored significant differences between national property markets.
Following a political agreement between member states and MEPs in April, the legislation would no longer affect buy-to-let mortgages and would set a seven-day “cooling-off period” in which a consumer can cancel a mortgage – shorter than initially proposed.
The rules are designed to reduce excessive risk-taking by mortgage providers, in particular when assessing applicants’ credit-worthiness, and would oblige providers to make available standardised information sheets to make it easier for consumers to understand and compare their offers.
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