Mortgage credit - creating a pan- EU mortgage market?

Pressmeddelande   •   Nov 14, 2006 09:45 CET

Scottish MEP John Purvis (EPP-ED, UK) is the Parliament's rapporteur on mortgage credit in the EU. His report is a response to the European Commission's Green Paper on the EU mortgage market and will be fed into the Commission along with the results of wider consultation with the financial industry and consumer groups as the basis for a Commission White Paper due out in May 2007.

John Purvis will open the Parliamentary debate on 14 November in Strasbourg and there will be a vote on his report by the whole Parliament on 15 November. The agreed report will then be forwarded to the European Commission.

Mortgage loans outstanding in the EU at the end of 2004 amount to 4.7 trillion euro or 45% EU GDP. Only 1% of this is currently cross-border. This still represents some 50 billion euro with the potential for much more if there were fewer cultural and other barriers to cross-border mortgage lending in existence.

Financial journalists invited to a press conference in London with John Purvis discussed key issues covered in the report as they saw them. Some questioned the rationale for promoting EU wide mortgage credit - is there in fact a demand for it? What were the main barriers to a pan-EU Market and where were they? Was there wholehearted support across the various Member States and political parties for the initiative? Was it likely legislation would result from the White Paper? What form would this take and how burdensome would it be? Would the UK mortgage market be a winner or a loser from the attempt to create a more integrated market?

Unable to look into a crystal ball, John Purvis nevertheless used experience in other sectors where Single Market integration had already happened to stress that once circumstances were changed opportunities which had not previously existed presented themselves. You might not know you need a Single Market in mortgages, you might be happy with the choice currently on offer in the UK but you could not know the new products which might flow from a pan EU market.

From being the big fish in a small pond, the UK mortgage industry might become the big fish in the very big pond of the 450 million consumers in the EU. Those states which joined in 2004 and other states joining the EU in the future do not currently have well developed mortgage markets.

Similarly there are huge changes afoot in the UK mortgage market as it attempts to serve new and changing customers in the light of the much more flexible social and employment circumstances we live in today. A home is the largest purchase made in a lifetime. Opening up the market should produce economies of scale, greater innovation, better value and greater choice with opportunities for those who currently find it difficult to get a mortgage such as first time buyers or those on fixed employment contracts.

Discussion touched on the lobbying received from individual banks and their trade associations and consumer groups. Specific areas had seen initial disagreement between political parties and highlighted some of the cultural differences between countries revealing underlying concern about the shape of possible change. Discussions at committee stage had produced greater understanding and acceptance of possible change and the result was broad support for specific action including:

* ways to encourage professional bodies to establish common property valuation standards across the EU;
* promotion of the role of the mortgage broker (a role virtually unknown in some Member States) and the sort of regulatory environment appropriate for mortgage brokers;
* improving access to standardised information on land registers and supporting further work on the European Land Information Service (EULIS)
* looking at the law applicable to mortgage credit contracts within the revision of the 1980 Rome Convention
* achieving a consistent format and non-discriminatory cross border access to both positive and negative credit data, subject to privacy protection
* in the area of forced sales, support for the idea of a scoreboard to name and shame and reduce the length and costs of judicial processes
* an examination of tax barriers, even if the resolution of such differences is dependent on the Member States under subsidiarity
* as a more integrated market comes about, encouraging the ECB and national central banks to watch out for possible systemic failure arising from the risks of the massive and increasing levels of debt in mortgage credit and their potential impact on capital markets

The report is the result of work in the Parliament's Economic and Monetary and Internal Market and Consumer Protection Committees. The Legal Committee also produced an opinion on relevant legal aspects.

Ref.: 20061113IPR12505
Caroline Boyle
Press Service - Press Officer / Head of Outreach
Telefonnummer : +44 (0)207 227 4300
E-postadress :

E-postadress :
Telefonnummer i Bryssel : (32-2) 28 41448 (BXL)
Telefonnummer i Strasbourg : (33-3) 881 73785 (STR)
Mobilnummer : +32(0) 498 98 32 39