Regulating mortgage providers

Regulating mortgage providers

MEPs are expected to approve on Wednesday (20 November) a final compromise on a law that would regulate mortgage providers in the European Union.



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.

Nicholas Hirst 

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