After at least ten years of preparatory work, Europe is on the eve of the birth of the single market for home loans, a market which involves a large number of households in the 28 EU Member States and which, in macroeconomic terms, represents 52% of gross domestic product of the Union itself. The goal is now within reach now that the European Parliament, in its plenary session in Strasbourg, has approved the text of the directive which defines the new rules that will regulate loan agreements and strengthens the guarantees that will better protect those who contract a debt medium-long term for the purchase of a house, but not only.
The new regulations establish precise transparency obligations for banks and also for other financial entities authorized to grant a loan for the purchase of a residential property (even if equipped with an office space) or building land. This means that, once these new rules come into force, the subjects authorized to grant a real estate loan will be obliged to provide applicants in advance with the broadest and clearest details on the costs and risks deriving from signing the contract.
But there's more. The lenders will have to bring to the attention of the applicants not only all the conditions of the loan offered, but also comparable information on the products available, including those relating to the total cost, the interest rate, the duration and other financial consequences deriving from the loan agreement. mortgage even in the long term. And also to put the potential borrower in a position to be able to compare his own financial situation, not only present but also in perspective, with the terms of the offer. A practical mechanism that will offer the lender a good basis for guaranteeing the repayment of the loan and the borrower the tools to avoid incurring financial obligations that he will be unlikely to meet.
Another rule of enhanced protection for those applying for a real estate loan is the obligation to insert a clause in the contract which gives the buyer the right to a reflection period of seven days before signing the contract. Or, alternatively, to exercise the withdrawal without charges up to seven days after the stipulation of the loan.
Another right attributed to those who have taken out a loan will then be that of being able to pay in advance the total sum borrowed without having to pay a penalty, as well as that of recognizing the lender the parallel right to request fair compensation.
Finally, two other new rules will strengthen the protection of the weakest subject, i.e. those who have obtained a real estate loan. The first is that, in the event of definitive interruption of the payment by the debtor, the loan will be considered fully repaid as a result of the return of the guarantees, such as the ownership of the property, but only if this opportunity has been explicitly accepted by both parties in the contract. The second is that, in the event of non-repayment, the national rules concerning the sale of the property by the creditor will have to aim at obtaining "the best possible price".
However, the approval of the measure by the Strasbourg Assembly does not mean that the new rules can be applied immediately. The Community legislative process is complex; and provides that the text of the directive must be submitted to the examination of the Council, the institution in which all the EU member states are represented, which will also have to express itself with a vote. And which will also be preceded by a "trilogue" discussion, an ad hoc body that will include representatives of the European Commission (which has the function of proposing laws) as well as those of the European Parliament and of the Council itself, for the last formal filings of the text.
This means that a few more months will pass before the legislative process is concluded, let's say no less than a couple. But not only. Since it is a directive, the rules will subsequently have to be transposed into the national legislation of each of the 28 member states; even not in full, provided however that they are aimed at achieving the results indicated in the Community directive and within the term set by the same provision (generally from a minimum of one year to a maximum of two) in its definitive formulation.
Even if, therefore, some time will still pass for the entry into force of the new regulations, those who contributed to the definition of the text of the directive express satisfaction with the substantial conclusion of the legislative process. The current president of Ecofin, the Lithuanian Finance Minister Rimantas Šadžius, said that this directive "will represent an incentive towards more responsible behavior in the definition of mortgages and will help those applying for a loan to decide after thoroughly evaluating each risk connected to the payment of loan installments.
The rapporteur for the proposed directives, the Spanish MEP Antolín Sánchez Presedo, from the Socialists and Democrats group, underlined that "after the subprime crisis in the United States and the housing market bubble in the EU, which caused real tragedies , this provision will guarantee stronger protection to all European citizens who intend to buy a house, and in particular in the event that they can no longer afford to repay a mortgage".
“I particularly appreciate the green light that the European Parliament has given to the directive proposed by the Commission – finally affirmed Michel Barnier, European Commissioner for the Single Market and Services – thus confirming its will to ensure consumers enhanced protection in the sector of mortgage credit and to continue pursuing the further enlargement of the single European market”.
