Responding to research released today by Which? into confusion over the cost of mortgages, Head of member and external relations, Sue Anderson has said:
"The mortgage process includes a number of checks and balances to try to ensure that consumers understand the whole picture of the rate, fees, charges, and total costs and characteristics of the mortgage they eventually choose. The compulsory key facts illustration sets these out in detail, based on the customer's individual circumstances, and consumers can obtain as many different KFIs on different mortgage deals as they want to before deciding which to apply for. Consumers do not, in real life, have to make their choices based on the very limited information that Which? used to gauge consumer awareness and capability to decide on which loan represented the cheapest option.
"The more important issue that the Which? data reveals is the limitations of the APR. Although the APR is a useful tool, it cannot be used in isolation from the other important disclosures about cost. Which? asked consumers to rate the deals on offer only for cost over the period of the special deal; the APR, on the other hand, is designed as a comparison tool for the long-term cost of the mortgage. Some time ago the CML published research on the concept of a more "dynamic" APR - see the CML website."