The European Parliament has voted to adopt the European Commission’s green paper on mortgage credit.
Led by Conservative MEP John Purvis, it will seek to create a new approach to house buying in Europe by reducing barriers to mortgage credit.
Although only 1% of borrowers currently get mortgages abroad, Purvis argues that this amounts to about 35bn worth of cross-border mortgage business with the potential for much more if there were fewer cultural and other barriers to cross-border mortgage lending in existence.
Mortgages have a major impact on the economy with over 3 trillion outstanding in the EU.
Over the past five years, the average growth in mortgage lending has been around 9.4%.
It is also one of the fastest growing segments in the new EU countries.
However, Purvis warns that, as with retail banking as a whole, the EU’s mortgage credit market is very fragmented.
He says: “What I want to see is a European mortgage credit market with a broad range of products at competitive prices.
This is why I am arguing in favour of concentrating future action on making it easier for lenders to establish their businesses in other EU countries and to enhance competition with targeted measures aimed at removing specific barriers.”
The key issues are creating a single, open and compatible funding
market, encouraging borrowers to shop around, and utilising the role of
mortgage brokers in helping borrowers have access to mortgage credit
from non-domestic lenders.
Purvis adds: “The development of common standards via non-legislative means should be encouraged where practicable with input from both industry and consumer organisations.
Such aspects could include access to quality credit information, certainty of title and land registers, valuations, APR calculation, early repayment and repossession processes.
“We must be careful not to act in a way which could be detrimental to this booming business sector or which is detrimental to consumers.
This is not an area in which greater integration will be easily achieved via EU legislation, but we can make a useful start by pecking away at the more blatant and more easily resolved barriers.”