[1] It was originally adopted by the European Commission on 4 February 2014 and Member states had to transpose the regulations in their national law by March 2016.
The objective of the Directive is to create a Union-wide mortgage credit market, with a high level of consumer protection.
[3] Furthermore, the Mortgage Credit Directive was designed as a preventive measure to avoid irresponsible lending and borrowing behaviour by market participants in the EU[1] and to avoid a situation similar to what happened in the United States in 2006–2008, where a real estate bubble affected over half of the United States and left many American citizens either homeless or in huge debts.
[3][4] In March 2003, the Commission initiated a process to identify and assess the impact of barriers to the internal market for credit agreements relating to residential property.
In March 2011, the European Commission adopted the proposal for a Directive on credit agreements relating to residential property.
[7] Included in the ESIS is a right of a seven-day reflection period, and information regarding the potential impact of interest rate changes.
[3][7] Member States should ensure that reliable valuation standards are in place to appropriately value immovable residential property before the conclusion of the credit agreement.
[3][7] The Directive proposes certain protection measures for credit agreements in a foreign currency due to the significant risks attached for the consumer.
[1][3][7] Member States should include or maintain disclosure requirements in their national law regarding the advertising of residential mortgages.
Specific provisions regarding the advertisement of credit agreements should be given to enable customers to compare different offers and prevent them from a misleading impression of the product.
[1][3] Member States should issue additional guidance on criteria and methods to assess a client's creditworthiness and they are encouraged to implement the Financial Stability Board's Principles for Sound Residential Mortgage Underwriting practises in this respective.