Brussels, 28/01/2014 (Agence Europe) - European consumers will be better protected and informed when taking out a mortgage, something that will also contribute to greater financial stability. The inter-institutional agreement setting up a European directive on the subject was approved by the Council on Tuesday 28 January.
The new legislation complements the scope of other European laws that did not cover mortgages. This legislation demands, for example, pre-contractual information and respect for advertising principles. The lending body will also have to assess the financial capacity of consumers, who will also have to be provided with relevant information. It is also stipulated that lending bodies, as well as credit brokers are more closely monitored. These provisions were developed following the crisis, which has seen a huge increase in the number of mortgage defaults and foreclosures, due to irresponsible behaviour by both lenders and borrowers alike. The new legislation was adopted by qualified majority. The Czech Republic, Luxembourg and Latvia abstained. The first cited reasons linked to co-operation between supervisory bodies and the latter two because they believed the text was too weak. (MD/transl.fl)