EU bid to open home loan market
The European Commission has unveiled plans to integrate EU mortgage markets, saying it could eventually lead to lower prices for borrowers.
The Commission expects most consumers to continue to borrow locally.
But it believes that the proposed measures will help improve competition among lenders and potentially drive down the cost of loans.
It wants to making it easier for firms to enter each other’s markets but stopped short of proposing a new law.
Instead, the more integrated market would be likely to be run on a voluntary basis in the 27-nation bloc.
The proposals, set out in a white paper, said the value to the EU economy of such increased integration over the next 10 years was about at 94.6bn euros ($136.4bn; £67.6bn)
This meant consumers could save as much as 470 euros per year in interest on a 100,000 euro mortgage loan by 2015.
Non-binding approach
“The Commission has not yet decided whether legislation is the most appropriate way forward to achieve the potential benefits from integration of mortgage markets,” it said in a statement.
Prospects of a binding approach through EU legislation have been strongly opposed by such markets as Germany and Britain.
Among the most important issues highlighted by the Commission are differences in national rules on early repayment of mortgages, different financial traditions and differing consumer behaviour, as well as language issues.
The Commission also said it had drawn “on the initial lessons that can already be learnt from the recent turbulence in financial markets”, sparked by problems in the US sub-prime market.
But it said that the proposals were not a reaction to the sub-prime crisis in the US, as its research dated back several years.
