Signs of the Times

With this year promising to be as dramatic as the last, Simon Smallwood looks at how upcoming political and economic changes might affect your mortgage across the Channel

- Simon Smallwood

This year has the potential to be just as unpredictable as last year: the winner of the French presidential elections will be anyone’s guess, while in the UK, Article 50 is on the brink of being triggered although we remain in the dark as to what our ongoing relationship with the EU will be.

With all of this going on it would have been simple to have missed some significant changes relating to how French mortgages are regulated in the UK and across the Eurozone.

Here, we will look at the changes that have taken place, and the impact this had on how borrowers sourced their mortgages when similar changes came into effect in the UK in April 2014.

Improved regulations

On 21 March last year the European Mortgage Credit Directive (EMCD) came into force aiming to create consistent standard guidelines regarding lending in Europe. The aim of EMCD implementation is to standardise the process of obtaining a first-charge mortgage secured against properties in the European Economic Area. Prior to the directive, French mortgages were not regulated by the Financial Conduct Authority (FCA) in the UK, in much the same way as how buy-to-let mortgages were historically viewed.

However, arranging French mortgages is now considered to be a regulated activity by the FCA and, as such, brokers and lenders carrying out this activity need to be FCA authorised if they are based in the UK. This is a good thing for consumers and ensures that borrowers are treated fairly and provided with the most relevant and transparent information when it comes to choosing the most suitable French mortgage for them.