Europeans could be paying less for home loans if there were a single market, the European Commission said yesterday, promising to air a proposal by mid-2005 to help integrate the EU mortgage market.

A report by the Forum Group on Mortgage Credit, which was set up by the Commission in March 2003, proposed 48 legislative and non-legislative measures to boost the integration of the EU home loans market.

The proposals cover such areas as consumer protection, client credit assessment, mortgage brokers, registration systems, which law should apply in cross-border contracts, and the financing of mortgages through capital markets.

"An efficient single market could mean cheaper and better loans for all Europeans, whether or not they obtain their mortgage abroad," said Single Market Commissioner Mr Charlie McCreevy.

By the end of 2002, outstanding residential mortgage loans in the old EU-15 member states amounted to €4 trillion, or 40 per cent of the gross domestic product.

A recent Eurobarometer study, however, showed that only 1 per cent of Europeans, mostly second-home owners or those in border regions, took out mortgages from another country.

The reasons include the difficulty of comparing products, languages and legal barriers, including differences in national provisions on consumer protection, such as early repayment rules.

The Forum Group concluded that EU legislation should bring into line national rules on early repayment fees and on calculation of real interest rates.

Other conclusions by the Forum Group include:

Confusion over which national law applies to contracts when more than one country is involved could discourage cross-border mortgage transactions;

The Commission should encourage information sharing in credit databases and land registration systems;

There should be a deeper and more liquid secondary market for mortgage funding. - (Reuters)