The MCD is an EU Directive which sets out proposals aimed at creating “an efficient and competitive single market for mortgages and housing across the EU”.
While the UK already complies with most of these new EU rules, the legislation implementing the directive contains some changes which include bringing the regulation of second charge mortgage lending into line with first charge mortgage lending. The government has intended to make this change for a number of years but chose to wait for these new EU rules to be implemented, in order to avoid excessive disruption to both mortgage firms and customers
It also introduces a new set of regulations for buy-to-let lending, where the lending is to consumers rather than for business purposes. This is not expected to affect the vast majority of buy-to-let lending which is done for business purposes and is therefore not subject to the directive
However, the information from the Treasury has met with some criticism.
Paul Broadhead, Head of Mortgage Policy at the BSA said:
“It is clear that this Directive will add cost and complexity to the mortgage process, with no discernible consumer benefit. I am pleased that the Government is taking a pragmatic approach to implement the minimum requirements to achieve compliance. However, we cannot get away from the potential for further disruption and consumer confusion, so soon after the implementation of the MMR and well before its impact has been fully is analysed.”
