Mortgage open market shelved

The European commission yesterday poured cold water on its original plans to open up the EU's €4.2 trillion (£2.9 trillion) mortgage market to more cross-border competition.

Charlie McCreevy, the internal market commissioner, said more competition could save consumers money by reducing charges, but the obstacles and costs of new regulations could far outweigh any benefits.

Only 1% of mortgages are taken out across EU borders, mainly by people living in border areas or buying a second home.

Mr McCreevy said the evidence was that homeowners preferred to take out loans in their own country, partly because of taxation, credit and property laws.

Launching a green paper, he suggested new players could be allowed to compete with banks but said he would not take action unless there was a demonstrable business case for it.