Economic and Financial Affairs Council, 28 January 2014

EU-wide mortgage credit rules adopted

The Economic and Financial Affairs Council on 28 January adopted a directive on mortgage credit.

The new directive, aimed at creating a single market for mortgage credit, will apply to all loans made to consumers for the purpose of buying a home and to all loans to consumers that are guaranteed by a mortgage or another comparable security across the EU.

Its overall aim is to ensure that mortgage markets operate in a responsible manner, thus increasing consumer protection and contributing to financial stability.

The text was adopted by the Council with all of the European Parliament's amendments, following the agreement reached between the two institutions at first reading.

The member states have to transpose the directive into their national law within two years. 

The mortgage credit directive at a glance

The new rules will address such problems as irresponsible lending and borrowing, misleading advertising and marketing, and insufficient pre-contractual information.

The directive sets out:

• conditions for ensuring a high level of professionalism amongst creditors and credit intermediaries
• principles for marketing and advertising
• obligations relating to pre-contractual information
• requirements for information concerning credit intermediaries
• requirements for information on the borrowing rate
• requirement to check the consumer's creditworthiness
• disclosure obligations for the consumer.

The text establishes regulatory and supervisory principles with regard to credit intermediaries as well as provisions to enable adequate regulation and supervision of non-credit institutions.

Other main topics on the agenda

Presidency work programme

The Greek presidency presented its work programme on economic and financial matters for the period until June 2014.

Excessive deficit procedure: Croatia

The Council adopted a decision establishing the existence of an excessive government deficit in Croatia and a recommendation which sets out the measures which should be implemented to correct the deficit by 2016.

Single supervisory mechanism: state of implementation

The European Central Bank briefed the ministers on the preparations for taking up its supervisory tasks on 3 November 2014 (subject to operational arrangements). The bank is about to launch the operational phase of an asset quality review as part of a comprehensive assessment of the banks which it will supervise directly. The review will be followed by a stress test exercise in the second half of 2014 in coordination with the European Banking Authority.