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Large mortgages set to be excluded from new Euro rules

A committee scrutinising the European Commission’s mortgage credit directive has proposed an exemption for mortgages over €2m.

Following the publication of the EC’s mortgage directive in March, the economic and monetary affairs and internal markets and consumer protection committees must both report on the proposals.

The Imco report suggests an exemption for loans over €2m and softens the proposal for mortgage advice to be “based on a fair and sufficiently wide-ranging analysis of the products available on the market”.

The proposal led commentators to speculate lenders would have to scrap their in-house advice teams. The Imco report has retained the line but adds that consumers should be told if advice is being given only on a limited range of products.

The report also removes the proposal to force lenders to explain to borrowers why they rejected their application. It says: “Just as there is no obligation to grant a loan, there should also be no obligation to provide information concerning the reasons for refusing it.”

Association of Mortgage Intermediaries director Robert Sinclair says the exemption for mortgages over €2m is sensible as it is likely to exclude only very sophisticated investors. He says: “There is good reason for taking them out as they do not need the protection.”

The two reports will feed into a single set of proposals to be voted on by the European Parliament.


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