The European Parliament adopted a resolution based on the own-initiative report drafted by John PURVIS (EPP-ED, UK) on the Commission Green Paper on mortgage credit in the EU. (For a summary of the main points of the resolution, please refer to the document dated 10/10/2006.)

The committee adopted the own-initiative report by John PURVIS (EPP-ED, UK) in response to the Commission Green Paper on mortgage credit in the EU. The report said that any EU level action should first and foremost benefit the public directly as mortgage borrowers, notably by widening access to mortgages, for example to workers with fixed term contracts. Stressing the need for extensive consultation in deciding on any EU action, MEPs noted the "numerous obstacles to a single retail market" in mortgages and called on the Commission to focus on targeted measures offering the greatest benefits, via market-led initiatives wherever possible.

The committee called for harmonisation of provisions for pre-contractual information, noting that if lenders offer credit in a Member State other than their own, this information must be available in the language(s) of the borrower's Member State. The Commission should consider making the existing Code of Conduct in this area mandatory. Borrowers should be informed in advance of all the costs involved, when information on such costs is publicly available, such as notary and land registration fees and the costs of any judicial processes and valuations. Where the information is not publicly available, an indication of the estimated costs should be provided.

The report stressed the importance of a single, open and compatible funding market as a first priority, as a way to diversify credit risk, boost efficiency and reduce costs, and urged the Commission to examine the legal and technical barriers to such a development. The committee expressed support for action to abolish discriminatory tax obstacles, such as different fiscal treatment of local and foreign lenders and government fees. It also supported the Commission’s action to facilitate cross-border mergers and acquisitions in financial services, while noting that these in themselves will not promote integration of the retail market. The report recognised the important role of mortgage brokers and similar intermediaries and asked the Commission to consult on an appropriate regulatory environment for them and prepare a proposal. Lastly, MEPs called on the Commission and the ECB to monitor and analyse the potential risks of increasing levels of mortgage debt and of mortgage credit funded from capital markets.

PURPOSE: to present a Green Paper on “Mortgage Credit in the EU”.

CONTENT: this Green Paper examines the case for greater EU action in the residential mortgage credit market. Much of the Paper’s content is based on a Commission funded study examining the costs and benefits of further mortgage integration. The presentation of this Green Paper forms an important element for the integration of financial services and retail financial services in particular.

In 2003, outstanding residential loans in the EU stood at around 44% of the EU’s GDP. Most of these loans were taken out with national and local lenders. Consumers appear reluctant to do business with foreign lenders for loans of this size and importance. Nor have foreign lenders exploited the EU’s internal market and offered their services in countries other than those in which they are based. The slow-uptake of cross-border mortgage lending is attributed to differences in marketing and the difficulty of comparing products, differing national legal rules on mortgage products and practical difficulties such as credit worthiness and property valuations.

The Paper questions what the potential benefits of mortgage integration could be. Estimated benefits include overall lower cost of the mortgage or home loan, better value for money ancillary products such as mortgage and home insurance; being able to target more borrowers (including those currently marginalised due to poor or incomplete credit ratings); plus the overall benefits associated with the EU’s economy of scale.

This Green Paper also examines what role, if any, the Commission should play in stimulating an dynamic internal market in mortgages. In addition it considers what, if any, benefits such an internal market would have on consumers. A number of questions are posed and include: Could Commission action result in better choice? How could consumers be best advised about mortgages to help them make an informed decision? What are the benefits, if any, of standardised rules on calculating interest rates or the fees charged when switching loans. How to improve access to cross-border information on matters relating to residential mortgage lending? Should the EU be encouraging more cross-border activity in mortgage loans? Is there scope for a new kind of mortgage lender, that is not a bank and therefore not subject to banking rules?

In preparing the Green Paper the Commission has taken four main distinct, but interrelated, areas into account namely, consumer protection, legal issues, collateral and funding. All of these issues are examined in detail. The Commission welcomes views on all matters covered in the paper and on any further issues considered key to the increased integration and efficiency of the EU mortgage credit markets.

PURPOSE: to present a Green Paper on “Mortgage Credit in the EU”.

CONTENT: this Green Paper examines the case for greater EU action in the residential mortgage credit market. Much of the Paper’s content is based on a Commission funded study examining the costs and benefits of further mortgage integration. The presentation of this Green Paper forms an important element for the integration of financial services and retail financial services in particular.

In 2003, outstanding residential loans in the EU stood at around 44% of the EU’s GDP. Most of these loans were taken out with national and local lenders. Consumers appear reluctant to do business with foreign lenders for loans of this size and importance. Nor have foreign lenders exploited the EU’s internal market and offered their services in countries other than those in which they are based. The slow-uptake of cross-border mortgage lending is attributed to differences in marketing and the difficulty of comparing products, differing national legal rules on mortgage products and practical difficulties such as credit worthiness and property valuations.

The Paper questions what the potential benefits of mortgage integration could be. Estimated benefits include overall lower cost of the mortgage or home loan, better value for money ancillary products such as mortgage and home insurance; being able to target more borrowers (including those currently marginalised due to poor or incomplete credit ratings); plus the overall benefits associated with the EU’s economy of scale.

This Green Paper also examines what role, if any, the Commission should play in stimulating an dynamic internal market in mortgages. In addition it considers what, if any, benefits such an internal market would have on consumers. A number of questions are posed and include: Could Commission action result in better choice? How could consumers be best advised about mortgages to help them make an informed decision? What are the benefits, if any, of standardised rules on calculating interest rates or the fees charged when switching loans. How to improve access to cross-border information on matters relating to residential mortgage lending? Should the EU be encouraging more cross-border activity in mortgage loans? Is there scope for a new kind of mortgage lender, that is not a bank and therefore not subject to banking rules?

In preparing the Green Paper the Commission has taken four main distinct, but interrelated, areas into account namely, consumer protection, legal issues, collateral and funding. All of these issues are examined in detail. The Commission welcomes views on all matters covered in the paper and on any further issues considered key to the increased integration and efficiency of the EU mortgage credit markets.