EU Mortgage affordability rules - should we be protected from our own stupidity?

michaels

The EU are enshrining and 'enhancing' the mortgage affordability rules:
http://www.moneysavingexpert.com/news/mortgages/2015/04/mortgages-warning-EU?_ga=1.187603176.1912725516.1413061559

Currently the rules can be waived for those with an existing mortgage so that they can get a new rate when an intro deal ends rather than going onto a rip off legacy rate.

From next March under EU rules there will be no discretion - great news for the banks who will now have a much larger group of locked in customers to fleece but how is this in the consumer's interest. If they are already affording a mortgage which they can keep, we are not talking new lending, why does it make sense to stop them switching to a more competitive deal?

As a libertarian this is wrong on so many levels:
We should be free to make our own decisions on how we spend our money not have 'people who know best' dictate how much of our income we cn choose to spend on housing. (Lots of people spend more than is sensible on cars or phones but as yet they are not prevented from doing so)
Why is this a matter for the EU rather than the UK to decide on, if the UK population as a whole wanted to be more or less restrictive how would we make our democratic voice heard?
And of course how does it make sense to lock someone onto a more expensive rate, surely if the level of borrowing is deemed unaffordable then it should be compulsory for the loan to be called in?!

(Personally the whole thing has the whiff of suppliers making a fast buck whilst pretending to have the consumer's interest at heart; I wonder if the big lenders have been lobbying for this?)

Thrugelmir

These rules were brought in so that mortgage lenders were prepared for the new EU rules that are coming into force next year.

The author of the article obviously knows nothing about the past ( i.e. Northern Rock for example).

purch

michaels wrote: »

(Personally the whole thing has the whiff of suppliers making a fast buck whilst pretending to have the consumer's interest at heart; I wonder if the big lenders have been lobbying for this?)

It would be very unusual if Governmental intervention in any market didn't end up in those they are 'protecting' getting a worse deal.

ging84

They are not protecting use from our own stupidity, they are protecting banks from our stupidity and their own stupidity, this might suck for consumers but any kind of regulation to do with banking stability will. They make banking more expensive and lending harder, which is bad for most people most of the time.
If the measures do their job, we are all supposed to benefit in some way, i'm not really sure how i never lost sleep worrying that my small amount of savings was at risk before during or after the financial crisis, but i must be in the minority.
Tougher regulation was what the public were calling for, well now they are getting it, i hope they are pleased.

michaels

But many of the rules apply regardless of deposit so in many cases they are really not protecting the banks, they are protected by equity so it can only be the consumers they are hoping to protect.

Thrugelmir

RBS has lost around £15 billion in the Irish property market since 2008. Equity is only a number on a piece of paper.