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EU-wide mortgage credit rules adopted

The EU has adopted a new directive aimed at creating a single market for mortgage credits in the EU, with a high degree of consumer protection that will come into force in all Member States in two years.

EU mortgage rules adoptedTHE Economic and Financial Affairs Council on 28 January adopted a directive on mortgage credit.

The new directive, aimed at creating a single market for mortgage credit, will apply to all loans made to consumers for the purpose of buying a home and to all loans to consumers that are guaranteed by a mortgage or another comparable security across the EU.

Its overall aim is to ensure that mortgage markets operate in a responsible manner, thus increasing consumer protection and contributing to financial stability.

The text was adopted by the Council with all of the European Parliament’s amendments, following the agreement reached between the two institutions at first reading.

The member states have to transpose the directive into their national law within two years.

The mortgage credit directive at a glance

The new rules will address such problems as irresponsible lending and borrowing, misleading advertising and marketing, and insufficient pre-contractual information.

The directive sets out:

  • conditions for ensuring a high level of professionalism amongst creditors and credit intermediaries
  • principles for marketing and advertising
  • obligations relating to pre-contractual information
  • requirements for information concerning credit intermediaries
  • requirements for information on the borrowing rate
  • requirement to check the consumer’s creditworthiness
  • disclosure obligations for the consumer.

The text establishes regulatory and supervisory principles with regard to credit intermediaries as well as provisions to enable adequate regulation and supervision of non-credit institutions.

Further reading

Press release – Council adopts directive on mortgage credits.

Readers' comments

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  • Deanna says:

    Why a two-year wait? This gives the ragamuffins plenty of time to think of new loopholes.
    Two months – it could be done.

  • Rosemarie Delaney says:

    Signing up for EU directives is one thing, but Cyprus, meaning we taxpayers, always end up paying huge penalties because the government does not transpose the directive into national law timeously. If Cyprus adopts this in 2016 then it will be a miracle.

  • Jim says:

    Unless there is a clause requiring a clean title deed to be given in exchange for the purchase price, this will do nothing to help the Cypriot property market.

  • Andrew says:

    Disclosure obligations.

    That is uncharted territory for developers, lawyers, banks, real estate agents and land registry. But the buyer must prove squeaky clean I guess.

  • M Hannah says:

    Hi All. well there you go, the first Directive: ie

    “Conditions for ensuring a HIGH LEVEL of Professionalism amongst Creditors and Credit Intermediaries”.

    Pretty much Blows Cyprus out of the water. I suppose the other Directives also are about the same, Perhaps this new Thingy only applies to the rest of the EU, and not to Cyprus. Ho Hum

  • ron richardson says:

    Nice to see some sort of action being addressed, that may eventually sort out this misselling mess. But I have many misgivings. When they will get round to my individual situation. I don’t think will happen, or even hazard a guess. It looks like I need to continue my legal claim to avoid being brushed aside. But there’s thousands still out there like me who need to start a claim. So what you waiting for ?

  • Peter Davis says:

    Two years to mend “their” ways. Really? If there is a need to legislate against corruption, why is there a two year grace period?

    And if there isn’t a problem why is there a need for legislation? Speaks volumes.

  • Trell says:

    I wouldn’t hold my breath. Considering how Cypriot banks and developers have unashamedly disregarded current consumer protection legislation like the UCPD and UCTD, I’m not expecting any better with this one.

  • Divadi Bear says:

    This is truly great news. Perhaps now buyers can consider buying in Cyprus once again in confidence that they won’t lose their “Shirts”??? !!! Now let’s see if Cypriot banks, property developers, builders and Lawyers can find a loophole to sell “Mortgages” on property and land already carrying one or more mortgages to innocent buyers !!

    It will not be easy !!

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