Malta is one step closer to the single European mortgage market after the government and the Opposition signified their endorsement of a Bill transposing the Mortgage Credit Directive into Maltese legislation.
Opening the second reading on the Bill amending the Consumer Affairs Act, Minister Helena Dalli said that “the new law is an important step towards strengthening consumer protection, leading to important changes affecting the property market and improving the availability of sound mortgage credit”.
Opposition spokesman Clyde Puli welcomed the Bill, recalling that “mortgages account for the entire outstanding debt of two-thirds ofEuropean households”.
The Mortgage Credit Directive, promoting responsible lending practices across the European Union, was approved in 2014 and member states were directed to transpose it into the national legislation by March 2016.
Consumers will be entitled to clearer information through the introduction of the European Standardised Information Sheet (ESIS), allowing them to compare products and shop around.A guaranteed period of reflection of at least seven days to consider the implications of the mortgage agreement will be established, during which consumers would enjoy the right of withdrawal.
Europe-wide standards for assessing the credit worthiness of mortgage applicants will also be introduced, ensuring that consumers are not offered mortgages they won’t be able to pay.
Member states are to ensure that property valuations are conducted by competent appraisers who are independent from the credit underwriting process to ensure objective valuation.
The introduction of a passport regime for credit intermediaries is designed to encourage cross-border activity throughout the Single Market.
Wider competition will drive prices down, according to the European Commission.
Creditors are also encouraged to apply reasonable forbearance with consumers in serious payment difficulties.
The directive will also grant consumers a general right to repay their loans early.
However, member states may decide that creditors are entitled to fair compensation for costs that are directly and solely linked to early repayment.