International real estate news: Brussels looking to stimulate European real estate credit

In its white papers published on 18 December 2007, the European Commission proposed a democratisation of the European real estate loan markets. By opening the market up to competition between the different lending institutions, it intends to kick-start European growth.

In an endeavour to avoid a real estate crisis similar to that of the American subprime crisis, it is calling on lending institutions to demonstrate responsibility in terms of:

• informing the consumer

• the early loan repayment issue

• the borrower’s ability to repay

Currently, the European real estate loan is marginal (1% of loans). To help the future borrower find his/her way, Brussels would like to create a standard European information sheet and harmonise APRC (Annual Percentage Rate of Charge) calculation.

This system should allow the borrower to choose the best rate of reimbursement and, based on a credit of € 100,000, save € 470 a year.