White Paper on the Integration of EU Mortgage Markets

The European Commission has published a White Paper on the Integration of EU Mortgage Markets. The White Paper summarises the conclusions of a comprehensive review of European residential mortgage markets and presents a balanced 'package' of measures to improve the efficiency and the competitiveness of these markets, to the benefit of consumers, mortgage lenders and investors alike. This is to be achieved in particular through improvement in the areas of cross-border supply, product diversity, consumer empowerment and customer mobility.

Evidence shows that the single market for residential mortgages is far from integrated. Obstacles exist that restrict the level of cross-border activity on the supply and demand sides, thus reducing competition and choice in the market. While the influence of factors such as language, distance, consumer preferences or lender business strategies cannot be underestimated, other factors, which prevent the conduct or substantially raise the cost of business for offering or taking out a mortgage credit in another EU Member State, can be addressed by appropriate policy initiatives. The potential benefits of removing these barriers could, according to some estimates, reduce the interest payable on a EUR 100 000 mortgage loan by as much as EUR 470 per year.

To unlock these benefits, the Commission seeks to improve the competitiveness and efficiency of mortgage markets by facilitating the cross-border supply and funding of mortgage credit as well as by increasing the diversity of products available. The White Paper also recognises that there can be no efficient market without confident and empowered consumers, who are able to seek out and choose the best product for their needs.

Recent events both in the US and in Europe have shown the economic and social importance of mortgage credit. Where possible and appropriate, the White Paper also draws on the initial lessons that can already be learnt from the recent turbulence in financial markets.

Non-legislative solutions are announced in particular in the field of land registration, property valuation, and forced sales procedures. The Commission does not rule out proposing future legislative measures if they are deemed necessary. However, until a rigorous impact assessment, including a quantitative cost-benefit analysis, has been undertaken and further consultation with all stakeholders have been concluded, the Commission considers that it would be premature to decide on whether a legislative approach would at this stage deliver the necessary value added.

More information
The White Paper and accompanying impact assessment are available here.