The CML reports
that UK lenders have made welcome progress on the final shape of the proposed mortgage directive after a recent vote by the European Parliament’s economic and monetary affairs (ECON) committee.
The vote last week backed the UK stance on buy-to-let lending. The UK stance is that buy-to-let lending should be excluded from the scope of the proposed directive. The committee also supported a measure which could mean that UK lenders will be able to continue using existing paperwork for disclosing details of mortgage products to consumers for another five years. This is so that there is more time for a transition from the ‘key facts’ illustration.
Members of the ECON committee voted last week on the amendments to the proposed European directive on credit agreements relating to residential property (CARRP). However, this was only a stage in a process. After the summer discussions are due to begin on the different versions of the proposed directive that have been produced by the European Parliament, Council and Commission. This debate between the three bodies is known as a ‘trialogue’, and a final draft of the directive will not be produced until after these discussions.
The ECON vote is a welcome endorsement of the UK’s position, on which the CML has lobbied strongly. The Treasury, FSA and UK MEPs also lobbied on this position. It was argued that buy-to-let loans should not be subject to the same disclosure and other regulatory requirements intended to provide protection for those taking out mainstream mortgage products. The ECON committee voted that individual member states should decide whether the directive applies in cases where the borrower does not intend to occupy the property.
The CML welcomes the stance of the ECON committee, but are still uncertain as to whether the final version of the CARRP will reflect the UK views on buy-to-let lending and disclosure. It is also concerned about ambiguous wording of the proposed rules linking savings accounts and mortgages. The concern about this is that the CML does not want it to affect guarantor mortgages where a borrower’s loan is partly secured by the savings of a parent in an account held with the same firm.
The CML is also calling for clarity on the ECON committee’s views on rates charged by lenders that are not linked to external indices like the Bank of England base rate. UK lenders want to be able to continue offering independent standard variable rates, which can often be a key feature of a firm’s product range.
Despite this good news, the CML will continue to represent the views of UK lenders as work on the proposed directive continues.
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