As mortgage lenders square up for a fight with Brussels over the EU Consumer Credit Directive, more than a third (37%) of IFAs questioned admitted that although they have heard of the new EU rules on consumer credit, they have no idea how they would directly affect borrowers. More worryingly, a further 33% of IFAs confessed they had never even heard of the proposed changes.
The new EU Directive, which could be introduced in the next two years, aims to establish a common approach to lending across borders. The directive would apply to customer’s drawing down credit under the terms of their flexible mortgages and would prevent them from using one of the key features of a flexible mortgage - the ability to borrow within agreed limits - without having to make a new application.
Key findings from the research found a massive 99% of IFAs questioned admitted they don’t know the full facts of what the Consumer Credit Directive would mean for borrowers – one in five said they only know a little. Of those who had some knowledge of the directive, 9% felt it would severely restrict flexible mortgage products with the same percentage again saying they were opposed to its introduction. A further 5% said the directive was not suitable for the UK market and 2% feared it would severely reduce consumer choice. 3% feared that the EU housing market was too diverse to be constrained by a single Europe-wide directive on borrowing.