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Hamptons calls for APRs to be scrapped

APRs should be axed as a means of demonstrating the cost of a mortgage, says Hamptons International Mortgages.

The broker believes the popularity of remortgaging, the inability to predict long-term trends in standard variable rates and lenders’ retention strategies make APRs useless as a tool as they are calculated over 25 years.

Technical director Jonathan Cornell says: “The APR is based on the highly unrealistic scenario of a client finishing their rate and being too lazy to switch products and spending the remaining 23 years or so on a standard variable rate which remains the same.”

Compliance consultant Adam Samuel says: “APRs need to be reset. The problem with scrapping them altogether is that you end up with no measurement as they take into account other charges.”

Mortgage Intelligence managing director Sally Laker says: “APRs are only accurate if a number of factors stay the same, which rarely happens. It needs someone to come up with something.”

FSA spokeswoman Sam Bennett says: “The APR is set in an EU directive we are following, which the mortgage industry signed up to.”

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