Lenders across Europe have expressed concern about some aspects of the Mortgage Credit Directive, which they claim may be not be in the interests of the consumer.
One particular area of concern, according to the secretary general of the European Mortgage Federation, relates to an interpretation of the foreign currency loan provisions in the MCD.
Luca Bertalot said: “This is a particular concern in some border areas, where borrowers are paid in one currency, but could buy a home with a mortgage in another currency – for example, for borrowers from the Irish Republic working over the border in Northern Ireland, or Swedes working in Denmark, or with Finns and Norwegians.
“The option provided for in the MCD to facilitate a conversion of such a mortgage from, for example, euros to sterling, could be extremely difficult to implement when banks operate a single currency mortgage system.
“Ironically, these provisions were arguably introduced by Members of European Parliament in response to concerns about foreign currency lending in central and eastern European member states – concerns which have, for the most part, since been resolved nationally.
“Now, the unintended consequences of these requirements are being felt in other parts of the EU.”
Overall, he said, the implementation of the MCD across the EU has been “multi-speed”, with some countries doing so faster than others.
Mr Bertalot said that the UK has been among the fastest to introduct the rules, mainly because it had a headstart due to MMR’s introduction in April 2014.
One of the big changes Mr Bertalot flagged up is the green paper on the future of retail financial services, which is due to be complete by the end of the year as part of the Capital Markets Union.
He said: “Potentially, it will have a broad reach, including digitalisation, cross-border lending, debt advice and access to redress, among other issues.”
The Council of Mortgage Lenders declined to comment.
