The European Commission is in the process of drafting a set of regulations that will homogenise mortgage lending practices in EU member states, after it already adopted the Consumer credit Directive. The starting point is the "White Paper on the Integration of EU Mortgage Credit Markets".
Consumers interested in a mortgage loan should be able to also choose from the offer of financial institutions from EU member states that are not directly present on the national market, in order to ensure tighter competition and lower costs, believe EC experts.
The biggest obstacle has been identified as the contractual hindrances banks have in place to discourage the early repayment of a loan with a view to choosing another lender. Of course, there are additional impediments such as problems related to distribution channels, the higher costs involved by the processing in Madrid of a loan application coming from Romania, as well as language issues.
Hopes related to the access to better financing conditions were fuelled by the adoption of the Consumer Credit Directive, whose introduction in Romania could take until 2010 (the official deadline).
The main beneficiaries of EC's efforts to push for the creation of a uniform credit market would be customers from CEE countries, where competition is sometimes weaker than in the West, and local credit costs are kept high for objective reasons because of the unfavourable economic climate.
The true integration of national credit markets could be realised as late as when all member states have adopted the euro, but harmonisation can begin with information transparency, standards on relationships with customers, and also practices on the early repayment of a loan.
Considering mortgage credit markets lag behind in terms of integration with a view to convergence to a single market, the EC launched a project to identify barriers and the ways they could be eliminated.
Conducted surveys show EU mortgage credit markets are competitive and efficient at a national level, but the EC maintains their integration would bring significant gains both for customers and lenders.
Brussels regulators have yet to reach a conclusion on the need to draw up a directive in this domain. The final decision in this regard will be made on the extent to which the EC finds its benefits would overshoot the costs related to the implementation of market condition harmonisation moves.
Romanian bankers will have to formulate opinions and send them to the NBR by March 21. On the basis of these opinions, the NBR will set Bucharest's stance on the project and send it to the EC.
Problems are grouped into 4 categories: obstacles in the way of a cross-border mortgage credit offer, limited product diversity and low customer mobility.
Hindrances
The problems identified by the EC are grouped into four categories, as follows:
Obstacles standing in the way of cross-border operations by mortgage lenders
The low level of product diversity
The low level of confidence consumers have in lending institutions that operate in other countries
The low level of customers' mobility
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