The European Banking Authority (EBA) has published a consultation paper on its proposed benchmark rate under Annex II of the Mortgage Credit Directive (MCD).
The MCD specifies the information that creditors should provide to consumers prior to the conclusion of a credit agreement, and amongst other things, requires creditors to provide this pre-contractual information to the consumer in the form of the European Standardised Information Sheet (the ESIS). Part B of Annex II of the MCD sets out instructions for creditors when completing the ESIS, including how to calculate the illustrative example of the annual percentage rate of charge and the illustration of the instalment amount.
The MCD provides that in certain circumstances the two illustrative examples are to be calculated by creditors using a benchmark rate specified by the EBA. To this end, the EBA has developed a formula to calculate the rate and would now like to hear the views from consumer and industry stakeholders on the approach it is proposing.
The deadline for comments to the consultation paper is 20 November 2015. The EBA intends to publish the final benchmark rate in Q1 2016.
View EBA consults on its benchmark rate under the Mortgage Credit Directive, 12 October 2015