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Euro rules threaten flexi loans

“Paternalistic” European Commission proposals pose a death threat to flexible mortgages, warns the Council of Mortgage Lenders.

At the CML Scotland annual conference, director general Michael Coogan said the EU&#39s proposal for a new consumer credit directive places such onerous restrictions on flexible mortgages that lenders would either be forced to stop offering them or they would become too expensive for UK borrowers.

The directive, published last week, would prevent consumers drawing down credit without making a new application, said Coogan.

Although the directive does not cover purchase loans, Coogan said this is “scant consolation” when remortgages, which make up 30 per cent of the UK market, and equity release fall under its scope.

He said: “The Commission&#39s proposal is paternalistic in the extreme. How insulting for the generality of European consumers who would prefer to be empowered rather than nannied by regulators.”

Prudential national mortgage manager John Malone says: “Our market is far more developed, with a greater product range than other parts of Europe. Flexible mortgages are a godsend for borrowers who have endowments as they are one way of reducing debt.”

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