The European commission released it proposals yesterday for a standardised European mortgage market. The UK has the largest mortgage market in the EU, so any changes to regulation need to be thoroughly considered before being implemented.

\”The aim of the Commission proposal is to create a responsible, efficient, healthy and competitive pan-European market that works to the benefit of consumers. It should also promote customer mobility, cross-border activity of creditors and intermediaries, and create a level playing field for all actors involved.\”

This has caused a mixed reaction, with many suggesting that it hinders more than it helps. The general sentiment seems to be that this has created unwanted confusion over the future of mortgage regulation with very little proposed benefits.

CML director general Michael Coogan commented:

\”We will need to scrutinise the Directive thoroughly, as well as the indicative impact analysis published alongside it, before drawing detailed conclusions. Even then, it may be difficult to work out the real impacts given that so many areas of the detailed policy will be delegated to the Commission to finalise and are not even included in the Directive itself at present.\”

\”But what we can already conclude is that, for the UK at least, there is likely to be an unholy confusion of competing draft rules at a national and European level that will keep legal advisers gainfully employed for some time to come. Whether or not the end result will help UK consumers remains to be seen, but seems unlikely given that the FSA is at the more robust end of the European regulatory spectrum already.\”

This may put pressure on the contractor mortgage market as the effects of regulation on contractor mortgages have typically been overlooked. We will have to keep abreast of this situation but it may be a while before these proposals are considered in the UK.

In other news, the Bank of England credit conditions survey has revealed that the number of defaults has unexpectedly risen in the first quarter of 2011. Lenders now expect defaults to rise further over the next three months.

Availability to credit had actually increased slightly, but demand had also dropped significantly. The notable exception to this was secured lending and remortgaging demand that increased over the previous quarter and is expected to increase again next quarter.

From the report:

\”Lenders commented that the pickup in remortgaging activity appeared to be linked to expectations of an increase in Bank Rate. Demand for buy-to-let lending unexpectedly rose a little, which lenders noted may have been a response to increased rental demand against a backdrop of limited availability to first-time buyers and uncertainty over the outlook for the economy. Lenders expected further increases in demand for remortgaging and buy-to-let lending of similar magnitudes in the coming quarter.\”

This is defiantly consistent with what we are observing in the contractor mortgage market. There are better options available now and we are ideally placed to offer contractors a better deal.

Author Bio: Article written by Taj Kang, Associate Director at Contractor Mortgages Made EasyTo contact us regarding this article e-mail: media@contractormortgagesuk.com

Category: Finances
Keywords: Contractor Mortgage, Contractor, Mortgage, Contractors, Mortgages, EU