Study on the costs and benefits of different policy options for mortgage credit

Practice Area: Finance
Client: N/A
Published: March, 2011
Tagged: EC/EEA impact assessment modelling quantitative analysis stakeholder surveys and consultations

The costs and benefits of potential changes in the following four mortgage policy areas are considered in the study, which was published by the European Commission on 31 March 2011: pre-contractual information, the definition of the annual percentage rate of charge, early repayment and responsible lending and borrowing. The approach to assessing the costs and benefits follows the European Commission’s Impact Assessment Guideline 2009, and, as such, the analysis accounts for the costs and benefits that can impact upon the following six stakeholder groups: mortgage credit providers, both domestic and cross-border, mortgage credit intermediaries, borrowers, credit registers, public authorities and the public at large.

The cost-benefit modelling accounts for both the immediate impacts of policy change (static impacts), and the broader impacts in terms of customer mobility, consumer confidence, product choice and mortgage market completeness, and cross-border lending. It also addresses the broader impacts such as financial stability. The modelling also accounts for any change in administrative costs of the policy options. The detailed cost-benefit analysis, involving econometric estimation and modelling, was undertaken for eleven Member States and EU-wide results were extrapolated from the results for the 11 Member States.