A new system for presenting information about the total cost of loans has been proposed by the Council of Mortgage Lenders as a better way for customers to make comparisons.
Research published by the CML suggests a Dynamic Annual Rate (DAR) system would be better for consumer compared with the current Annual Percentage Rate (APR) model. The CML says the APR system is calculated on the assumption loans will be held until maturity, however the majority of mortgages are repaid after a few years as consumers remortgage seeking better rates. The proposed DAR system is calculated only for the period of time for which the loan is kept and takes intoaccount any payments and charges over this period. The research, conducted by Frank Chacko, consulting actuary at Gran...
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