The Mortgage Credit Directive (2014/17/EU) (MCD) requires that
creditors create two illustrative examples for variable rate
mortgages on the basis of a benchmark rate specified by the EBA.
Consequently, the EBA has developed a draft formula with which
creditors are to calculate the rate. By producing a formula instead
of a single rate, the EBA aims to ensure that its rate is
representative of national circumstances. Annex II to the MCD sets
out instructions for creditors when completing the European
Standardized Information Sheet, including how to calculate the
illustrative example of the annual percentage rate of charge (APR)
and the illustration of the installment amount.
On October 12, 2015, the EBA published a consultation paper
(EBA/CP/2015/16) on its proposed benchmark rate under the MCD. The
consultation is open until November 20, 2015. The EBA intends to
publish the final benchmark rate in the first quarter of 2016.
