Euromortgage plan to integrate EU homebuyers
The “Euromortgage” could be the next step in EU integration, according to a new report today.
A study for the European Commission suggests the idea as part of a plan to encourage house-buyers to shop around in the 25 member states for the best loan deals available.
An effective single European market for mortgages could mean cheaper loans for all, says the Forum Group on Mortgage Credit, set up by the commission.
Streamlining the EU-wide home loans sector to take away the potential pitfalls of borrowing abroad, would give consumers more choice and financial savings, as well as opening up a single market for lenders, says the report.
Ireland’s new commissioner in charge of the single market, Charlie McCreevy, said he would now produce policy proposals by mid 2005 on the basis of the findings, adding: “A mortgage is the biggest purchase most consumers make. So we must not shrink from the challenge of creating a true single market for home loans.
“An efficient single market could mean cheaper and better loans for all Europeans, whether or not they obtain their mortgage abroad.”
At the moment only one per cent of Europeans – mostly second home owners or residents in EU border regions – take out a mortgage in another member state.
Reasons cited in surveys include language and legal barriers, confusing different standards of consumer protection, and – in non-euro currency member states – worries over fluctuating exchange rates.
Today’s report says consumer confidence is essential to the creation of an integrated mortgage market, and urges EU-wide legislation to harmonise differing national laws on early repayment fees and on the calculation of “real” interest rates.
The report looks at consumer protection, mortgage brokers, credit assessment systems, and which laws apply in cross-border house loan arrangements.
It makes 48 recommendations to boost consumer confidence to go for the best mortgage deal anywhere in the EU without fear of falling foul of “foreign” rules and regulations.
They include minimum EU-wide consumer protection for mortgage loan contracts “at the very least at the highest level currently in existence”, an EU-wide right of legal redress, and a regularly-updated commission online guide to legal and other issues on cross-border mortgages.
The report says the applicable law for a mortgage deed and any related security agreement should remain the law of the EU country in which the property is located.
And it says: “The commission should explore the concept of the Euromortgage, for example by way of a study, to assess its potential to promote EU mortgage credit markets integration.”
At the end of 2002 outstanding residential mortgage loans in the then 15 EU member states stood at about four trillion euro – 40% of the national wealth of those countries.
