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Compromise proposal for cooling-off period

vicky barnard
Vicky Barnard: Happy with the EC proposal

The 14-day cooling-off period proposed in the European mortgage directive is likely to be watered down.

The proposal to allow borrowers a 14-day reflection period after agreeing a mortgage was suggested by the European Commission in the first draft of the directive.

It was then dropped by the EC only to be resurrected at the Council of Ministers by the French delegation in the summer of 2011.

The European Parliament’s Economic and Monetary Affairs Committee has now proposed a mixed policy allowing states to decide whether the cooling-off period applies before or after completion of the mortgage deal.

Annik Lambert, secretary-general of the European Mortgage Federation, says: “As it stands, member states can decide whether to impose a reflection right before or after completion.

“If this is maintained then states will take a decision based on their national rules.”

Vicky Barnard, mortgage policy adviser at the Building Societies Association, says: “Initially the concern was that the 14-day cooling-off period would start from the date of completion.

“The compromise text now allows for borrowers to opt out within 14 days before completion, so as it stands we are happy with the proposal and it will have minimal impact on the UK market.”

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