EBA replies to European  Commission’s call for advice on the Mortgage Credit Directive review 

The European Banking Authority (EBA) published today an Opinion and Report in response to the European Commission’s Call for Advice (CfA) on the review of the Mortgage Credit Directive (MCD) . The EBA proposes to review the MCD, in particular, to facilitate the smooth functioning of the internal market for mortgages, foster a level-playing field across all types of lenders and ensure a higher level of consumer protection across EU Member States. 

The EBA has observed that, overall, since the application of the MCD in 2016, consumer protection has become more effective throughout the EU Single Market and the practices related to the mortgages have been mostly harmonised across Member States. 

However, the EBA identified some specific issues to be addressed and in its Opinion and Report proposes to clarify the scope of the MCD, the impact of digitalisation and the ways to facilitate the cross-border provision of mortgages. It also addresses how the MCD can contribute to financial stability and the interplay with sustainability. In particular, the EBA is suggesting to:  

• revise the requirements on pre-contractual and advertising information to provide consumers with the appropriate information to make an informed decision and to compare products;  

• ensure that the requirements on information disclosure are fit for digital channels; 

• introduce additional consumer protections measures when artificial intelligence systems are used for creditworthiness assessment; 

• introduce borrowers-based measures in the information provided to consumers to promote responsible lending and borrowing while contributing to financial stability;  

• establish an EU-wide definition of ‘green mortgages’ to encourage sustainable lending and borrowing.  

Legal basis and background  

The MCD was adopted on 4 February 2014 and entered into force on 21 March 2016. It applies to loans to consumers the purpose of which is to buy residential property.  

According to Article 16a(4) of the EBA Founding Regulation, the Authority may, upon a request from, inter alia, the European Commission, provide technical advice and deliver an opinion in the areas set out in the legislative acts referred to in Article 1(2) of Regulation (EU) No 1093/2010.