Overview

The EU market for mortgage credit is fragmented, with obstacles to the cross-border provision of services.

The financial crisis has also had a strong impact on EU citizens, affecting their confidence in the financial sector. The crisis illustrated the fact that irresponsible lending in one country can have consequences in other states. These issues require action at the European level.

The EU is working to

  • integrate the market for mortgage credit
  • promote common standards
  • protect consumers across the EU

EU rules for mortgage credit

The mortgage credit directive is a step towards an EU-wide mortgage credit market with a high level of consumer protection.

The directive applies to all loans made to consumers for the purpose of buying residential property.

The directive includes the following provisions

  • an obligation for lenders to provide clear and detailed information on loan conditions to consumers
  • an obligation for lenders to assess the creditworthiness of consumers according to common EU standards
  • common quality standards and business conduct principles for all EU lenders
  • the right for consumers to repay credit earlier than determined in a contract
  • an EU passport scheme that allows credit intermediaries authorised to operate in any EU country to deliver services across the EU

Annual percentage rate of charge (APRC) calculator

The annual percentage rate of charge refers to the annual cost of a loan to the consumer, expressed in terms of the total value of the loan. A simulator based on the provisions of the mortgage directive is available to help users calculate the APRC of a given value of credit.