Standard Irish rates are the highest in the EU as bailed-out banks try to recover and it is currently almost impossible for people to borrow from banks outside the country.

The European Commission plans to produce an action plan next summer that aims to open up the market, allowing competition for mortgages and for deposits and insurance.

A green paper that sets out the obstacles and how to remove them has been seen by the Irish Examiner. The public and stakeholders will be asked for their opinions in advance of a conference in the spring.

The move has been welcomed by Brian Hayes, former junior finance minister and a member of the European Parliament and its economics committee.

“Irish customers face rip-off prices for variable mortgages,” said Mr Hayes. “The average variable mortgage rate in Ireland is 4.18%, close to double the eurozone average. In Germany or France you can get a long-term fixed interest mortgage for less than 3%. We’re part of an internal EU market so Irish customers should be able to get a mortgage from a French or German bank.”

The commission’s paper says only 3% of consumers have a mortgage, credit card, or insurance from another member state. Opening up the mortgage market alone — that is worth half of the EU’s GDP — would be a huge move, saving householders up to €63bn a year.

It would also be a boon to savers who are getting almost no interest on money in Irish deposit accounts. The gap between what people pay for Irish mortgages and get for deposits is the widest in the EU. The kind of changes needed to allow cross-border financial services include:

Better advertising of what is available in more languages including with comparison websites;

Making sure consumers can be confident of dealing across borders;

Having the same creditworthiness system across the EU;

Systems to let lenders know the value of property in each country;

Ensuring debt could be recouped or property repossessed if necessary.

The paper suggests insurance policies to guard against losses when banks lend on property in another state could be devised to overcome such risks.

The proposals would also allow people to carry their mortgages with them if they sold in one country and moved to another where they purchased a property.

The commission plans an online questionnaire on the issues and will ask member states to organise consultations and events with the public and national parliaments on the issues. They will consult European parliamentarians and organise workshops with experts.

The first move towards making cross-border mortgage purchases possible comes into force in mid-March with the same minimum standards to protect borrowers in all EU countries and giving them cross-border redress. It will also allow properly supervised credit intermediaries.

However, in its review of the Irish mortgage market in May the Central Bank warned against interfering with rates charged by banks.