Fianna Fáil MEPs have welcomed this week’s breakthrough, after months of negotiations, on the Mortgage Credit Directive and the protections it entails for consumers. Currently two-thirds of the loans in portfolios are mortgages. The Directive will ensure that the mortgage credit providers meet new professional standards, and will encourage competition.
This Directive ensures that consumers will be guaranteed clear information and appropriate advice on loan proposals before they enter into what is often a lifetime commitment.
Commenting on the content of the decision, Liam Aylward MEP welcomed the increased protections for consumers:
“Under this legislation property buyers will be better informed about the costs and consequences of taking on a mortgage, better protected from market swings and better protected if they cannot repay the loan. They will have the right to comparable information about the products available and the long-run financial consequences of taking out the loan.”
The increased supervision of mortgage sellers which aims to eliminate irresponsible lending is also a welcome move. Mortgage sellers should be authorised, registered and supervised by national authorities so that they meet strict professional requirements.
Ireland North West MEP, Pat the Cope Gallagher has welcomed the push from MEPs for protection in the Directive for consumers who seek to repay their loans early.
“Under this Directive the payment of penalties for early repayment would be prohibited which is a positive step. Crucially the Directive also requires creditors to apply reasonable forbearance when being confronted with homeowners in serious payment difficulties and to work with them to prevent over-indebtedness for long periods.”
Speaking on the breakthrough Brian Crowley MEP for Ireland South West stated:
“I particularly commend the decision to regulate ‘tying practices’ so that consumers are no longer forced into buying insurance or other financial products from the provider due to conditional credit offers. The banning of “tied” products will give consumers greater flexibility and choice and the ability to switch providers if they so choose.”
The legislation will cover mortgages on residential property, property including an office space and building land.
In order for member states to being implementing these protections the agreement must be approved in a vote by the European Parliament and endorsed by the member states.