Council of the European Union Adopts Directive on Mortgage Credit

On 28 January the Council adopted the Directive on Credit Agreements Relating to Residential Immovable Property (the Mortgage Credit Directive). The decision was made by qualified majority with abstentions by the Czech Republic, Luxembourg and Latvia. The text has already been approved by the European Parliament and will come into force twenty days after being published in the Official Journal of the EU. CEPI looks forward to the full and correct implementation of the Directive in EU Member States and will follow this together with its member associations.

The aim of the Directive is to create an efficient and competitive single market for mortgage credit, providing a high degree of protection for consumers and discouraging irresponsible lending and borrowing. It imposes conditions on creditors and credit intermediaries. It also sets out principles for marketing and advertising and information requirements. The creditor must assess the creditworthiness of the consumer. The Directive also establishes regulatory and supervisory principles with regard to credit intermediaries and contains provisions on the regulation and supervision of non-credit institutions.

The Directive will have to be implemented by EU Member States into national laws and regulations within two years. The stability of the market for mortgage credit is vital for the long-term health of the residential property market and the way in which the text is implemented at national level will be important for real estate professionals.