EU rules to cause more mortgage confusion
New EU mortgage rules, which will effect UK borrowers, have been given the green light by the European Parliament in Brussels.
The European Credit Directive is expected to be implemented within two years.
Under the new rules, mortgage lenders across Europe will be forced to display worst-case scenarios to borrowers taking on a loan.
Mortgage lenders will have to prominently publish the maximum interest rates they have charged over the past 20 years, despite the fact that this has no bearing on the rates it currently charges.
Experts have described the directive as ‘crackpot’ and ‘useless’, and expressed concern that it will simp,y lead to more confusion in the marketplace.
In a statement, the European Parliament said:
“Anyone signing up for a mortgage in the EU should receive comparable information about the products available, and understand the total cost and long-run financial consequences of taking out the loan. Credit terms offered to borrowers would have to match their current financial situation and take account of their prospects and possible downturns.”
Only mortgages with a fixed period of more than five years are expected to be exempt. Mortgage lenders have until 2015 to comply with the legislation.