Bolkestein to tackle mortgages across Europe’s single market

Date: 13/03/03

By Peter Chapman

FRITS Bolkestein is setting up a think-tank which will identify barriers to the single market for mortgages and table ideas for EU legislation to remove them.

The think-tank is part of the internal market commissioner's drive to create a framework for pan-European financial markets and boost the EU's aim to become the world's most competitive economy by 2010.

Bolkestein has invited more than 20 experts from mortgage lenders, insurance companies, notaries and consumers to take part in the mortgage forum.

The group, which will gather for the first time later this month, is expected to meet every two months thereafter and will report back "early next year" to Bolkestein with its conclusions.

"The forum will identify obstacles to the smooth functioning of the mortgage credit market and will make formal policy recommendations to the Commission," confirmed Bolkestein's spokesman Jonathan Todd.

Mortgage industry experts said legal and cultural barriers to a pan-EU home loans market are so formidable that consumers are never likely to actively shop abroad for a mortgage in large numbers.

Instead, they expect the group to target the red tape that makes it easier for willing companies to actively target business in other member states.

It is expected to highlight the major differences in the way mortgages are taxed from one country to another, along with rules governing the rights of the lender where a client fails to make repayments.

Judith Hardt, secretary-general of the European Mortgage Federation said: "We think it is an excellent initiative but I don't think there is any way to turn on the magic and create a single market.

"Even in the US there is not a true single market," she said, explaining that the various states have a legal patchwork for mortgages similar to that of the EU.

"But one of the biggest problems in Europe is the lack of a large capital market to tap funding, like the US has."

Hardt insists that Bolkestein's new think-tank should not lead to the demise of the 'mortgage code of conduct' - a separate Commission-led initiative between mortgage providers across the EU.

More than 3,700 firms across Europe have signed the code, pledging to abide by fair business practices and to provide customers with easy-to-understand information on home loans.

David Byrne's consumer protection department has sent 'mystery shoppers' to member states to test the effect of the code.

But Hardt urged the Commission to step up these efforts to make sure it is well applied in all member states.

Frits Bolkestein, the internal market commissioner, is setting up a think-tank which will identify barriers to the single market for mortgages and table ideas for EU legislation to remove them.