European Union plans to be unveiled tomorrow to create a more joined-up market for mortgages will draw on lessons from the US, where a subprime loans crisis is upsetting global financial markets.

The European Commission's Internal Market Commissioner, Charlie McCreevy, wants to make it easier for lenders to offer their services to all the 490 million consumers living in the 27-nation bloc.

Although consumers are expected to continue taking out mortgages locally, competition among lenders would help drive down the cost of loans.

The EU executive cites a study showing that integrating EU mortgage markets would be equivalent to 0.7 per cent of the bloc's economic activity and cut mortgage interest rates by up to 47 basis points by 2015.

This would trim repayments on a €100,000 home loan by €470 a year.

An early version of the commission's plans seen last month said there was a case for a mandatory shakeup that would oblige lenders to offer loans responsibly.

This sparked resistance in Germany and the UK and in the version due to be unveiled this week, the intention to propose legislation has been dropped in favour of further studies.

"Until this impact assessment has been undertaken . . . the commission considers that it would be premature to decide on whether a directive would deliver the necessary value added," the latest draft said.

Senior EU lawmakers said the continued global credit squeeze due to defaults in the US market for home loans to people with poor credit histories, makes legislation hard to define.

On Tuesday, the commission is expected to say it has "duly taken into account, where possible and appropriate, the lessons that can already be drawn from the recent events in financial markets".

The commission says four core issues need further study before deciding whether legislation is needed.

In 2008 the commission said it will: explore with the EU assembly and states the costs and benefits of different options for a more common approach to policies on early repayments, look at how information about a loan can be standardised so that consumers can compare them more easily without having to wade through reams of jargon, examine how to forge a common approach to presenting consumers with a loan's annual percentage rate of charge and explore means of further increasing responsible lending by drawing lessons from the US subprime crisis.