Paul Gogarty (Dublin Mid West, Green Party)
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Question 142: To ask the Minister for Finance his position on an EU wide mortgage credit market. [39078/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I welcome the work of the Mortgage Expert Group which is investigating opportunities to integrate the EU mortgage market. Because of the scale of this market, at €4.7 trillion, and the expectation that the sector is set for significant growth, the removal of barriers which cause fragmentation should lead to improved competition, efficiency and consumer choice, and of course cheaper mortgages. I acknowledge, however, that there are important obstacles to be overcome, particularly in relation to the differences in the laws of Member States and lack of knowledge of other markets on the part of both the lender and the borrower. This has led to low levels of confidence in conducting cross border mortgage business. I would agree with the view expressed by Commissioner McCreevy last week that any change in this area will be incremental. It is also true that, because of the size of the EU market, quite small percentage increases in cross border mortgage lending could amount to a significant increase in mortgage business in national terms. Furthermore, given the variety of practices in the Member States, a principles based approach to harmonising mortgage credit across the EU may be appropriate, so that existing efficient and competitive individual markets within the EU are not disadvantaged as a result of the integration proposal.

The complexity of the mortgage integration issue has been recognised by the Commission in the manner in which it is engaging with the process, through consultation and dialogue, and the publication of its Green Paper. In addition, the findings of the Funding Expert Group set up by the Commission addresses an area where competitive and economic success may be achieved, (i.e. in the secondary mortgage market through the use of pan-European funding). The standardisation of the mortgage deed, forced sales procedures, valuation and taxation systems are among the many other issues which remain to be addressed. In addition, I share the view that non-legislative options for the integration of the mortgage credit market should be thoroughly examined prior to any regulatory intervention. Legislative intervention to prescribe rules should be used only as a final option to address proven market failure. The Commission's White Paper, due to be issued in the coming months, will outline the next steps and will recommend areas to which the mortgage integration proposal should be directed, and I look forward to its publication.