EU mortgage vote good news for UK lenders
Economic and Monetary Affairs Committee votes to exclude BTL from new regulation and allows UK to continue using key facts illustrations.
Today’s (7 June) vote by the European Parliament’s Economic and Monetary Affairs Committee is a promising development for the UK mortgage market, the Council of Mortage Lenders has claimed.
The committee has voted on the European directive on credit agreements relating to residential property and decided not to include buy-to-let mortgages under the directive and to allow key facts illustrations to be used for five years after the directive comes in to effect.
The use of KFI is a boon for the UK mortgage market, as otherwise lenders would have to switch immediately to the European Standardised Information Sheet, thus incurring a large additional administrative cost.
Jackie Bennett, head of policy at the Council of Mortgage Lenders, said: “We are pleased to see that many of the long standing issues we have been lobbying on have reached a positive outcome for the UK in the EU Parliament today.
“So for example, the UK would be able to exempt buy-to-let from the directive and we would be able to keep the KFI for five years after the directive has been implemented.
She added: “However, some provisions have been included which only emerged at a late stage of negotiations but which may not have had their full implications considered and we will continue to work on these issues as the directive goes into its next stage of discussion.”
These surprises include policies which would make standard variable rates much more complex and difficult for lenders to use if they are not clearly linked with a reference rate such as the Bank of England base rate.
Although this vote is good news for UK mortgage lenders, it is far from finalised. The proposed legislation will now enter a period of consultation which could take up to nine months or one year. The council has to vote on which elements to include and which changes to uphold, and then evaluate several different versions before settling on a single, final piece of legislation.