EU unveils plan to integrate mortgage markets


The European Commission on Tuesday unveiled a plan to integrate mortgage markets of the European Union member states, aimed at facilitating cross-border lending.

„This balanced package of measures is designed to bring about amore efficient and competitive EU mortgage market where consumers can shop around for the best product for their needs, confident in the fact that their lender acts in a responsible manner,” EU Internal Market and Services Commissioner Charlie McCreevy said. Evidence showed that the EU 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. The commission said 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 member state, can be addressed by appropriate policy initiatives.

In a white paper, which summarized the conclusions of a comprehensive review of European residential mortgage markets, the commission presented a series of measures to improve the efficiency and the competitiveness of those markets, particularly in the areas of cross-border supply, product diversity, consumer empowerment and customer mobility. The existence of different national early repayment regimes was identified as one of the key obstacles to integration of mortgage markets. However, the commission did not announce any legislative solutions in particular in the field of land registration, property valuation, and forced sales procedures.

According to a study carried out in 2005 by London Economics on behalf of the commission, the value to the EU economy of such increased integration over the next ten years is estimated at €94.6 billion ($136.4 billion), which amounts to 0.89% of EU gross domestic product in 2005. By 2015, the study estimates that integration of the EU mortgage credit market would raise EU GDP by 0.7% and private consumption by 0.5%. The potential benefits to EU borrowers could reduce the interest payable on a €100,000 mortgage loan by as much as 470euros per year. (

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