Crossing the mortgage line
Charlie McCreevy is set to become a very familiar name to property investors throughout Europe.
The European Internal Market Commissioner has said he intends acting on 49 recommendations put forward in December last year by the Forum Group on Mortgage Credit (FGMC), a group of financial experts. The group's report highlights how the EU mortgage market can be opened up, particularly in the area of cross-border loans.
The European mortgage market is estimated at EUR4 (zł.15.5) trillion and only one percent of loans are currently cross-border, mainly by those seeking a second home abroad. However, Commissioner McCreevy wants to facilitate serious growth in this area and cut down the red tape surrounding real-estate law in Europe. This could see the EU scrapping laws and regulations that stifle economic growth and McCreevy also said he plans to halt the introduction of new laws in financial services and other sectors.
No new laws
In a frank interview with the Guardian newspaper, Commissioner McCreevy laid his intentions bare. "This E4 trillion market, the stock of outstanding loans, accounts for 40 percent of EU GDP and, if we can open it up, it would be of immense benefit for consumers by bringing more innovation in the sector, coming up with better and better-and cheaper-products. It would also release more purchasing power to spend on other economic activities."
Interestingly, McCreevy plans to do this without introducing new legislation. FGMC wants mortgage law in the EU to be harmonized, as is the case with many other legal areas. This would facilitate growth and allow Polish consumers to pick and choose for financial products throughout the EU, rather than restricting themselves exclusively to Polish banks. "In this era of new technology and growing use of the internet there is no reason why you should not be able to access the best deal," said McCreevy.
The Commissioner is no stranger to controversy. As Minister for Finance in Ireland, he oversaw much of the country's spectacular economic growth throughout the 1990s. Since becoming Internal Market Commissioner in 2004 he has been making waves in Europe, particularly with his controversial services directive, which aims to open up the EU market in professional services in many areas, including medicine and law. France and Germany have already demanded that the ambitious proposals be diluted, but McCreevy has a formidable economic reputation.
Get used to it
"In this area, as in others, less regulation means better regulation and I intend to deliver on that. Any new proposal has to add significantly to economic activity and growth. If it's marginal we won't do it and I have told my services to get used to this diktat: you don't have to be hyperactive the whole time to be effective. If regulations are hindering what we are doing they should be scrapped and repealed," he told the Guardian.
FGMC was set up by the European Commission in 2003. It recommends a number of radical changes to the EU mortgage market including: the harmonization of the Annual Percentage Rate charge, in both the method and the basis of calculation; the creation and maintenance of an online guide to the main legal and other issues on cross-border lending; a standardized EU format for mortgage loan contracts; and making the links between mortgage debts and collateral security more flexible.
Will it work?
According to Nigel Wade, managing director of CB Richard Ellis in Poland: "I think it would be quite revolutionary to introduce such a thing in Poland. My question would be, would it work?
"The problem I see is that there is a tremendous amount of bureaucracy in Poland so if I were to go for a loan in Germany, for example, at a much better rate, how would that affect me as an individual paying that loan because I'm paying in euro as opposed to złoty? Then there are questions of how the money will come into that person's bank account and how it will be treated from a tax point of view. It is very difficult to get money into Poland, it could open a lot a more problems than it solves."
Tough task
CB Richard Ellis is essentially a commercial real-estate agency, so Wade sees an online guide having little impact on his clients. "From our perspective, most of the people borrowing will know the state of play and will know the major players and won't need that online service. The other consideration would be the normal Pole on the street and would he be able to tap in and use that service. It sounds like quite a tough task."
Commissioner McCreevy seems to have set himself a tough task indeed, but the residential real-estate market will no doubt wait anxiously to hear his detailed proposals later this year.
The European Internal Market Commissioner has said he intends acting on 49 recommendations put forward in December last year by the Forum Group on Mortgage Credit (FGMC), a group of financial experts. The group's report highlights how the EU mortgage market can be opened up, particularly in the area of cross-border loans.
The European mortgage market is estimated at EUR4 (zł.15.5) trillion and only one percent of loans are currently cross-border, mainly by those seeking a second home abroad. However, Commissioner McCreevy wants to facilitate serious growth in this area and cut down the red tape surrounding real-estate law in Europe. This could see the EU scrapping laws and regulations that stifle economic growth and McCreevy also said he plans to halt the introduction of new laws in financial services and other sectors.
No new laws
In a frank interview with the Guardian newspaper, Commissioner McCreevy laid his intentions bare. "This E4 trillion market, the stock of outstanding loans, accounts for 40 percent of EU GDP and, if we can open it up, it would be of immense benefit for consumers by bringing more innovation in the sector, coming up with better and better-and cheaper-products. It would also release more purchasing power to spend on other economic activities."
Interestingly, McCreevy plans to do this without introducing new legislation. FGMC wants mortgage law in the EU to be harmonized, as is the case with many other legal areas. This would facilitate growth and allow Polish consumers to pick and choose for financial products throughout the EU, rather than restricting themselves exclusively to Polish banks. "In this era of new technology and growing use of the internet there is no reason why you should not be able to access the best deal," said McCreevy.
The Commissioner is no stranger to controversy. As Minister for Finance in Ireland, he oversaw much of the country's spectacular economic growth throughout the 1990s. Since becoming Internal Market Commissioner in 2004 he has been making waves in Europe, particularly with his controversial services directive, which aims to open up the EU market in professional services in many areas, including medicine and law. France and Germany have already demanded that the ambitious proposals be diluted, but McCreevy has a formidable economic reputation.
Get used to it
"In this area, as in others, less regulation means better regulation and I intend to deliver on that. Any new proposal has to add significantly to economic activity and growth. If it's marginal we won't do it and I have told my services to get used to this diktat: you don't have to be hyperactive the whole time to be effective. If regulations are hindering what we are doing they should be scrapped and repealed," he told the Guardian.
FGMC was set up by the European Commission in 2003. It recommends a number of radical changes to the EU mortgage market including: the harmonization of the Annual Percentage Rate charge, in both the method and the basis of calculation; the creation and maintenance of an online guide to the main legal and other issues on cross-border lending; a standardized EU format for mortgage loan contracts; and making the links between mortgage debts and collateral security more flexible.
Will it work?
According to Nigel Wade, managing director of CB Richard Ellis in Poland: "I think it would be quite revolutionary to introduce such a thing in Poland. My question would be, would it work?
"The problem I see is that there is a tremendous amount of bureaucracy in Poland so if I were to go for a loan in Germany, for example, at a much better rate, how would that affect me as an individual paying that loan because I'm paying in euro as opposed to złoty? Then there are questions of how the money will come into that person's bank account and how it will be treated from a tax point of view. It is very difficult to get money into Poland, it could open a lot a more problems than it solves."
Tough task
CB Richard Ellis is essentially a commercial real-estate agency, so Wade sees an online guide having little impact on his clients. "From our perspective, most of the people borrowing will know the state of play and will know the major players and won't need that online service. The other consideration would be the normal Pole on the street and would he be able to tap in and use that service. It sounds like quite a tough task."
Commissioner McCreevy seems to have set himself a tough task indeed, but the residential real-estate market will no doubt wait anxiously to hear his detailed proposals later this year.
