EU mortgage directive agreed
Once written into law the rules will force lenders in Europe’s £5.56tn mortgage market to check the creditworthiness of potential customers and their ability to repay – in effect banning self-certified mortgages.
As well as seeking to avoid risky lending the rules will increase consumer protection and make it more difficult for lenders to repossess property homes from borrowers who fail into arrears.
The agreement has been welcomed in the UK and is unlikely to unlikely to cause problems for domestic lenders.
Paul Smee, director general of the Council of Mortgage Lenders, said: “The government, FCA and the industry have worked positively together to ensure that the new rules will broadly suit the UK mortgage market and appear unlikely to cause problems for lenders.
“There will inevitably be additional work for both regulators and lenders to ensure that the requirements are fully reflected in UK rules, especially as they come hot on the heels of the implementation of the FCA’s new domestic requirements for mortgages.
“UK customers already receive significant consumer protection and information as our regulatory regime is already the most advanced among European member states, but for customers in some other member states the changes will result in increased protection and greater consistency.”
The new rules still need to be rubber-stamped by the full parliament and EU governments before entering force in mid-2015.