What is the European Mortgage Credit Directive (MCD)?
On 21 March 2016, a European Union directive known as the ‘European Mortgage Credit Directive’ (MCD) will be implemented across Europe. Here in the UK, the Financial Conduct Authority (FCA) and HM Treasury have been working together to ensure a smooth transition and minimal disruption during this period. In reality, and in contrast to the implementation of the MMR back in 2014 bringing stricter affordability rules to the mortgage market, most people won’t notice or be affected by the roll-out of MCD.
Why is MCD being introduced?
The MCD has been developed to standardise mortgage agreements across Europe; designed to benefit consumers by offering additional information in the mortgage contract and introducing a reflection period of at least seven days, to give the consumer time to assess the implications.
How will it affect me?
When applying for a mortgage you will be supplied with a binding mortgage offer from your lender, and have a minimum of seven days to consider it.
You will also see a transition to the European Standardised Information Sheet (ESIS) by 21 March 2019. Currently, every mortgage offer is accompanied by a Key Facts Illustration (KFI), but this will be phased out between 21 March 2016 and 21 March 2019. Some lenders, however, like us, have already chosen to implement the ESIS.
Things that must be included on the new ESIS that are not currently displayed on the current KFI are:
● Showing a second Annual Percentage Rate Charge (APRC) which will show the consumer the highest rate in the last 20 years.
● Details around the Binding Offer.