Mortgages: EU Law

(asked on 5th November 2018) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the EU Mortgage Credit Directive on access to lower mortgage rates.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 12th November 2018

The EU Mortgage Credit Directive (MCD), which came into force in March 2016, prevents lenders waiving the affordability requirements when a borrower moves to a new lender. As a result some borrowers may find it harder to switch to a new lender to access lower rates.

While we must comply with the MCD, the Financial Conduct Authority have put in place exemptions which allow lenders to waive affordability requirements for customers that are remortgaging with their existing lender but not increasing the size of their debt. In addition in July 2018, UK Finance, the Building Socieities Association, and the Intermediary Mortgage Lenders Association, announced a cross industry voluntary agreement. Under this agreement lenders undertook to write by the end of 2018 to any borrowers on the reversion rate who are up to date with payments, and have a minimum of 2 years and £10,000 left on their mortgage, to let them know they can access lower mortgage rates with their existing lender. Officials in the Treasury continue to work closely with the FCA and industry to explore what more can be done.

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