Mortgage Credit Directive

The Mortgage Credit Directive 2014/17/EU (MCD) on credit agreements for consumers relating to residential immovable property was adopted on 4 February 2014. This Directive aims to create a Union-wide mortgage credit market with a high level of consumer protection. It applies to both secured credit and home loans. Member States will have to transpose its provisions into their national law by March 2016.

Since mortgage activity in the UK already had a comprehensive regulatory framework the MCD impact will be less than in some other EU Member States. One of the biggest changes in the UK is that second charge mortgages move from the consumer credit regime and into the full regulatory sphere.  Hence providers now need to seek full authorisation.

The UK government decided to not apply the MCD to the buy to let market. New rules on arranging, lending and administering (consumer) buy-to-let mortgages are introduced by the Mortgage Credit Directive Order 2015.

Another Library Paper describes the FCA’s Mortgage Market Review.