Press release

Specificities of EU mortgage markets create subsequent challenges for cross-border lending

21 March 2016

The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) published its response to the European Commission’s Green Paper on Retail Financial Services: Better Products, More Choice, and Greater Opportunities for Consumer and Businesses on Friday 18th of March 2016.

To recall, the aim of the Green Paper on Retail Financial Services, published on the 10th of December 2015, is to identify the specific barriers that consumers and firms face in making full use of the Single Market and ways that those barriers could be overcome, including by making best use of new technologies.

The EMF-ECBC welcomes the opportunity to provide its feedback on the Green Paper and would like to thank the European Commission for their ongoing commitment to a constructive dialogue.

In its response, the EMF-ECBC underlines that the Mortgage Industry is certainly not opposed to the prospect of increased cross-border activities, but suggests that this potential is mainly relevant for other types of financial services products that are simpler to provide than a mortgage loan. Indeed, the mortgage sector is a particular case when it comes to cross-border activities. This is due to the essential character of the mortgage product, which is intrinsically linked to the location of the property, and will, therefore, to a certain extent, always be subject to the respective national frameworks.

The EMF-ECBC does, however, indicate that there are potential market opportunities in the area of digitalisation of financial services and suggests that the European Commission should focus on how the regulatory environment can better support a digital mortgage market. This being said, the EMFECBC notes that the mortgage granting process cannot be entirely digitalised. The assessment of the creditworthiness of the borrower, the valuation of the property and the intervention of a notary in a number of Member States, for example, remain key elements of the process which require physical presence or action of various actors in the chain.

In commenting on the European Commission’s Green Paper on Retail Financial Services, Luca Bertalot, EMF-ECBC Secretary General, stated:

“We acknowledge the importance of retail financial services, including mortgages, for citizens and welcome the European Commission’s efforts to remove barriers for suppliers. The EMFECBC remains ready to assist the European Commission in this context by advising on the specificities of the mortgage business and the challenges these pose for cross-border lending.”

The full EMF-ECBC response is available here.