The European Commission’s mortgage credit directive will see no benefit to the UK mortgage market but will mean customers pay more for their mortgages, warns Imla.
Speaking at the Imla executive briefing, Imla chairman John Heron said the directive, and in particular the EC’s proposal to introduce a European standardised information sheet to replace the key facts illustration, will end up costing lenders a lot of money for no benefit.
He said: “What the directive may impose in various areas is a one-size-fits-all approach, which will require UK lenders to change the way they do things without having an benefit. A perfect example is we may have to adopt the Esis instead of the KFI.
“This will involve lenders having to make major changes to systems and processes which will come at a massive cost for some lenders. And those costs eventually end up with the consumer at some point.”
Platform business development director Lee Gladwell said he fears the added cost the directive will impose on lenders might damage competition as lenders pull out of the market or are put off entering.
He said: “Looking at the way the regulation is taking shape now, the biggest risk and the worst possible outcome would be that it will add so much cost to lenders that it will either discourage new lenders from entering or force some to withdraw at the margins.”
Imla executive director Peter Williams said: “Given everything that is happening in the eurozone, you cannot help but ask the question what priority does this now have and the integration of European housing markets has probably been put at a higher level than it should have been.”