Proposed new rules to ensure that house buyers are properly informed before taking on a mortgage have been approved by the Economic and Monetary Affairs Committee. These rules should also ensure that buyers are offered mortgages that are tailored to their needs and that their creditworthiness is properly assessed.

Some of the legislation’s requirements would be adapted to reflect differences among EU Member States’ national mortgage and property markets, but the basic rules would apply EU-wide and information for buyers would have to be presented in a consistent format across the EU.

MEPs have stiffened the requirements proposed by the Commission on information to be provided before the borrower signs a mortgage and inserted rules on the borrowers ‘financial education’.

The text says that any financial advice given to borrowers should be impartial, and enable them to understand the long-run financial consequences of taking out the loan. Everyone signing up for a mortgage should receive comparable information about the products available, and be informed whether there is any financial incentive that might lead the adviser to recommend a particular product.

The rules aim to protect borrowers not only from irresponsible lending, but also from their own misjudgements and also to ensure that mortgages go only to those who can afford them.