McCreevy pours cold water on Euro mortgage market

NO further action will be taken to create a pan-European mortgage market unless it can be proven that the benefits to both lenders and borrowers exceeded the costs, Internal Market and Services Commissioner Charlie McCreevy pledged yesterday.

He launched consultation on what if any action the EU should take to encourage cross-border mortgages that account for about 1% of the €4 trillion market.

A study on the general costs and benefits of integrating the EU market for mortgages will be available next month on the commission’s website.

“We may or may not initiate action in the mortgage area or in a limited number of areas that might improve matters for everyone.

"We will consider everything before we reach a decision,” Mr McCreevy said in Brussels yestesaid he would like to see a situation where a person in one country could pick the mortgage that best suits them off the internet from another member country.

“More cross-border activity and competition could increase choice, reduce costs and leave more money in people’s pockets,” he said, but added that this may not be possible.

The Forum Group set up by the commission to provide advice on developing an EU mortgage market which reported last December, made 48 proposals and pointed out the kind of issues that could prove difficult to resolve.

Mr McCreevy said these included the fact that people preferred to deal with somebody from their own country for reasons of language and the legal system.

The Green Paper considers whether there are benefits in having EU standards for information about mortgages, for rules on calculating interest and for fees for switching mortgages, how can lenders’ access data in other countries on potential borrowers’ credit histories, property valuations and land registers.

It also asks if there is scope for a new kind of mortgage lender that is not a bank and so not subject to all banking rules, to increase competition in these markets.