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Natalie Thomas
Bridging market concerned over EC plans for cooling-off period
CHRISTIAN FAES, AGAINST AN EC BLANKET RULE
The European Commission has been urged not to include the bridging market in its proposals to introduce a 10-day cooling-off period for mortgage contracts.
The EC has not made it clear whether the proposals would only apply to regulated mortgage contracts or the wider credit market.
Christian Faes, managing director at Montello Private Finance, says: “Such a move could spell the end of bridging finance as we know it.”
But he says early indications are that the proposals will be limited to the regulated mortgage market rather than a blanket rule for all mortgages.
Roger Morris, sales and marketing director at Affirmative Finance, says it would be crazy to impose such restrictions on the bridging and mortgage sectors.
He says: “Buy-to-let and commercial lending should be seen as business tran-sactions. Borrowers should be allowed to make commercial decisions by themselves.
“If a 10-day cooling-off period is introduced it’s a sign that the regu-lators do not trust the advice process, which means that problem needs addressing first.”
Morris adds that a mortgage application can take months to complete in the current market and borrowers are turning to bridging loans to speed up the process.
He adds: “Clients will not want to wait even longer to buy property.”
A spokesman for the Council of Mortgage Lenders says the proposals are still being discussed by the EC and their scope is unclear.
The CML revealed last month that the EC is considering replacing the Key Facts Illustration with a European Standardised Information Sheet which could include a cooling-off period.
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Readers' comments (1)
Ray Cohen | 11 Oct 2010 5:04 pm
It isn't just commercial bridging mortgages that we should be worried about - there is a large and developing regulated bridging market assisting borrowers when the mainstream lenders can't get their act together quickly enough (quite common at the moment).
Typically due to the speed requirements offers get amended several times as the information gets refined (many firms issue offers subject to survey).
If you had to go back to having a 10 day cooling off period every time something changed the loans would never be able to complete on time.
This is a major issue that will need a strong lobby of support to protect the ability of borrowers to get the finance they need to avoid defaulting on deals or losing out on properties.
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