A more complete disclosure of mortgage terms with a new background information about the characteristics of the products offered by banks for purchase the main house: this is the purpose of education supervisory dated December 30, 2008 and issued by the Bank of Italy on its website (the text is given below) by virtue of Article 2, paragraph 5, of Decree-Law No 29 November 2008 185 (not yet enacted into law).
The European rate
This rule requires, from 1 January 2009, banks that offer loans to customers secured by mortgage for the purchase of a principal, to provide our clients the opportunity to enter into such swaps indexed to the rate on main refinancing operations of the European Central Bank (ECB). The reason for the rule
is likely to be found in the consideration that the financial turmoil of the last months of 2008 had caused such havoc in the interbank market (ie in the financial relations between banks) to make the Euribor a parameter can not be trusted. So the law now requires, for consumers who wish to anchor their mortgage rate at the ECB more stable than the more volatile Euribor.
In other words, in addition to the traditional range of products anchored to the Euribor (ie the rate of interbank and then at the rate that banks pay to borrow money to another bank), bank customers from now on will have still produced at the rate practiced by the ECB, which expresses the conditions under which the ECB itself is willing to transact with the market. So much so that the rate of participation in the main refinancing operations, which provide most of the Eurosystem liquidity necessary to alert the market orientation of monetary policy.
effects
In terms of the amount of the installment, however, should not change anything, because banks have spread differ depending on whether the benchmark for the calculation of the rate variable is the Euribor rate or the ECB . It is naturally lower than the first and probabilmnete mortgage rate spreads ECB will loans denominated in more than Euribor.
The rule also requires banks to offer products targati ECB has also introduced the requirement that the overall rate applied in such agreements "are in line with that charged for other forms of indexing offers," and that therefore the adoption of the parameter Indexing anchored conditions ECB is not a reason to increase the load of customers in payment of installments.
Transparency
In his instructions, the Bank of Italy took the opportunity not only to ensure transparency of information about these new types of mortgages, but also expand the background information of the banks about their products. In fact, is prescribed that "disclosure is provided to customers on all types of mortgage offered by the bank, to facilitate the choices of customers to products that are potentially more suited to his needs."
In this regard, banks should clearly show the typical characteristics and risks of the various operations of mortgage offered to customers, and that in order to facilitate the understanding of the main differences between the different products offered.
From 1 March, the banks should prepare a document with information on mortgages offered. In particular, it should at least be the subject of advertising in relation to several products: a) the rate of interest (specifying if the is fixed or variable and, in the case of variable rate, the spread, the benchmark rate and the amount of advertising at the time), b) the minimum and maximum duration of the loan; c) the repayment conditions d) the frequency of installments.
The document should be sent, at the first communication gains (but no later than April 15) to customers who have a loan outstanding with the bank.
Angelo Busani
www.sole24ore.it
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