Hamptons calls for APR on mortgages to be scrapped
www.moneynews.co.uk > Mortgages > Hamptons calls for APR on mortgages to be scrapped
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Money News |
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Hamptons calls for APR on mortgages to be scrapped
Mon 14th Aug 2006
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This announcement comes after the Halifax said it had joined the likes of Nationwide, Woolwich and Northern Rock in offering new rates to existing clients, reports Mortgage Introducer.
APRs are used to give an indication of the full cost of a loan over the entire term of a mortgage.
However, Hamptons is arguing that as customers begin to realise the benefits of remortgaging to get better rates, the APR becomes useless.
This is because the standard variable rates over 20 years are impossible to predict and as remortgaging increases, the length of time consumers spend on a standard variable rate decreases, meaning the APR calculation is inaccurate.
It is also believed that there is a general lack of knowledge about APRs. However, in a bid to retain customers, many lenders are starting to offer attractive rates as an incentive.
However, at the same time, brokers are being compensated for the role they play when helping customers to stay with existing lenders.
"Even lenders, who have traditionally relied on customer complacency to boost their bottom lines, will soon wake up to the fact that they need to start offering existing customers reasons to stay as well as attracting new ones," Jonathan Cornell, technical director for Hamptons International Mortgages, tells the website.
"I'm baffled as to why APRs have lasted as long as they have, as I cannot think of anyone within the industry who feels they are a good measure of value," he concludes.
Related News : Mortgages |
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