News Review


“Confusing” EC mortgage proposals will cost millions By Sarah Davidson


Proposals published by the european commission will see the Key Facts illustration replaced with a less detailed european


Standardised


information Sheet, full registration of intermediaries at european level and increased pre-approval disclosure to better protect consumers if they are made law. the european directive


was labelled “confusing” by the industry which also raised concern about its cost. the proposed regulation


covers all loans which allow the consumer to borrow money in order to buy a home as well as certain loans to consumers to renovate a home. it also covers all loans to consumers that are guaranteed by a mortgage or another comparable security. the commission said:


“Borrowers will enjoy a higher level of protection through robust rules concerning advertising, pre-contractual


Lenders and local authorities up


stakes for FTBs By Sarah Davidson


the 2011 Budget gave a boost to first-time buyers after lenders and local authorities had already stepped in, upping loan to values through innovative deals to help would-be homeowners get a foot on the property ladder. northern rock launched a


90% LtV deal while national australia Bank-owned lenders, Yorkshire and clydesdale, both upped their LtVs to 95%.


information, advice,


creditworthiness assessment, and early repayment. “the requirement to provide


personalised information to the consumer through a european Standardised


information


Sheet will allow consumers to compare mortgage conditions from different providers.” intermediaries will also be


expected to assess borrowers’ ability to repay under the proposed regulation. it is not yet clear how these proposals will interact with the Financial Services authority’s proposals in the mortgage market review – particularly relating to disclosure. Paul Broadhead, head of mortgage policy at the BSa, said the requirement for an eSiS with prescribed content and layout could burden the industry with costs running into tens of millions of pounds. He said: “this is unlikely


to deliver any benefit to uK consumers as they will receive less information than they


Skipton launched a 90% 2-year fixed rate via connells and the chorley launched its own 90% exclusive with mortgageforce. Skipton’s head of products, Kris Brewster, said: “We are continuing to do all we can to help borrowers achieve their homeownership aspirations despite challenging market conditions by offering choice and good value to suit a range of circumstances.” Higher LtVs were not the only boon for first-timers as Lloyds Banking group linked up with fifteen local authorities to launch a variation on its Lend a Hand mortgage where borrowers


4 mortgage introducer APRIL 2011


currently receive through the KFi.” tony Ward, chief executive of Home Funding, added: “the FSa initial regulatory regime was based on disclosure to allow borrowers to understand what they were getting and then compare one lender’s offering with that of another – just like the eu is now suggesting. “We know that in practice


this doesn’t provide the whole solution. it seems to me that we are ahead in our thinking in the uK and this eu directive will serve to complicate and confuse.” the proposed directive


aims to create a more efficient and competitive single market for mortgages by creating a level playing field for all actors involved and making cross- border activity easier. But the council of mortgage Lenders said the existence of idiosyncratic markets in europe’s member states coupled with the fact that property valuation and


can top up a 5% deposit with 20% from parents. the product now offers local authorities the option to help first-time buyers by stumping up the additional 20% in place of parents. east Lothian, Blackpool,


newcastle-under-Lyme and Warrington were among those to sign up to the scheme, which is only available direct. unlike shared ownership the buyer will own the whole property. Stephen noakes,


commercial director at Halifax, said: “We know that a lot of young people turn to the Bank of mum and dad to get their foot on the ladder, but that’s


registration, and different funding mechanisms and consumer product appetites would not be addressed by the proposals, meant it was unlikely a single market would emerge as an outcome of the directive. cmL director general,


michael coogan, said: “Whether or not the end result will help uK consumers remains to be seen but it seems unlikely given that the FSa is at the more robust end of the european regulatory spectrum already.”


Broadhead added: “now that


the draft directive is published it is vital that the FSa pays close attention to its effect on the mortgage market review. the summer consultation will need to incorporate the european dimension if it is to include a full and robust impact assessment.” it now passes to the


european Parliament and the council of ministers for consideration.


not a solution for everyone. By developing Local Lend a Hand and working with local authorities across the uK we’re broadening the prospect of home ownership to even more first time buyers.” meanwhile, george


osborne used the Budget to announce a £250 million shared equity fund to be matched by builders in an effort to help first-time buyers raise 20% deposits for purchasing new build properties. FirstBuy was welcomed by the mortgage and property industries though the cmL called the move “modest”. See News Review: Budget 2011, p 26


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