Consumers looking to buy a home should find it easier to shop around for a mortgage under new European rules introduced in Ireland yesterday.

However, obtaining a mortgage for those living in the south but working in Northern Ireland may become more difficult, while getting a cheaper mortgage in another EU state remains unlikely despite the introduction of pan-European rules.

Under the European Mortgage Credit Directive new EU-wide responsible lending practices have been introduced. The directive was adopted in February 2014 and came into effect across Europe on Monday – but only yesterday in Ireland.

While many of the elements of the regulations introduced by the new directive are already in practice in Ireland, there has been a concern among lenders over uncertainty arising out of the Government’s decision not to transpose the regulations until the last minute.

In the UK for example, lenders were given the opportunity to apply the rules from September 21st last year.

This means that some borrowers, who have already been approved for a mortgage, may find that they will need to provide their lender with additional documentation or paperwork in order to comply with the new rules.

Cooling-off period

The

directive has introduced a minimum seven-day “reflection” or cooling off period, during which borrowers can compare offers, assess offer implications, obtain third party advice (if necessary), and make an informed decision on whether to accept an offer.

The Irish interpretation of this rule will see consumers have up to 30 days to change their minds. Borrowers across Europe will receive a “European Standard Information Sheet” (ESIS), which will include some new information such as the annual percentage rate of charge (APRC), replacing the APR calculation.

The directive will also introduce a new category of “foreign currency loans”. People living in the Republic but working in Northern Ireland for example, and therefore earning sterling, could have their mortgage classified as a foreign currency mortgage.

Credit worthiness

The directive will also introduce EU-wide standards for assessing the credit worthiness of mortgage applicants, and it establishes principles for the authorisation and registration of credit intermediaries. Significantly, this is seen as a first step in the creation of a single European mortgage market, which could increase competition and drive down prices, although its realisation still remains some way off.

In July 2015, the Government set out its view on various areas of the directive where it had discretion to implement.

These included areas such as commission payments for mortgage brokers, with the Government asserting that it would not prohibit such payments.