Cheaper Mortgages But?
December 14, 2004 by Ken
Filed under The Best of the Rest
Banks plan pan-European wholesale mortgage lender
By Grant Ringshaw (Filed: 15/06/2003) Telegraph
A group of some of Europe’s biggest banks have drawn up bold plans to create a pan-European bank to provide a wholesale mortgage finance market with backing from the European Investment Bank.
The organisation would aim to emulate the gigantic mortgage finance companies in the US, called Freddie Mac and Fannie Mae, which play a central role in providing long-term fixed-rate funds in the $7,000bn US mortgage market. Their role is to repackage mortgages and sell them to investors as bonds.
The secret plan was drawn up two years ago by Abbey National, Britain’s second-biggest mortgage lender, Credit Agricole of France, HVB, the German bank, and Spain’s BBVA. Abbey has now left the group.
These things take time to mature under the tutelage of the EU.
EC unveils plan for the Euromortgage
By Edmund Conway
(Filed: 14/12/2004)
Brussels yesterday proposed the creation of a “Euromortgage” and urged homebuyers to shop around to find the cheapest deal on the Continent.
But financial experts said it would be “madness” for most British homebuyers to buy a mortgage in euros, even though they might find better rates abroad.
In a report, the European Commission suggested the creation of a single European mortgage market, claiming that housebuyers should be encouraged to shop around in the 25 member states.
The EC’s Forum Group on Mortgage Credit said an effective single European market for mortgages could mean cheaper loans for all.
However, the paper neglected to warn that homebuyers could see the price of their mortgage rocket because of exchange rate fluctuations.
Oh good cheaper mortgages, this must be great news for everybody? Well there is another way of looking at it, and true to form Dr North at EU Referendum cuts strait to the problem this sort of initiative will have for those of us who do not want to adopt the Euro.
But it would also mean serious inroads into the monetary sovereignty of member states, who rely on being able to fine-tune interest rates to cool over-heated housing markets, and damp-down consumer spending when it threatens to get out of control.
The net outcome of such a move – and many others like it – is that euro refuseniks gradually lose many or all of the advantages of being outside the euro, while gaining none of the slender benefits of membership. The balance of the argument thus shifts, and the case for staying out is weakened.
Anti-euro campaigners will thus look out of their armoured forts one day and see the tanks parked up behind them, their guns pointing towards their exposed rears, leaving nothing else but to run up the white flags.
That is the trouble with partial campaigns. To mix metaphors outrageously, once you cuddle up to the tar baby, you have to go all the way. Like the impossibility of being a bit pregnant, as far as the EU is concerned, there is no such thing as a little bit of integration.
