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Halifax says APRs won’t die

Halifax has denied claims that the restructuring of retention fees will make annual percentage rates redundant.

Jonathon Cornell, technical director at Hamptons Mortgages, says APRs are the white elephant of the mortgage market, and retention schemes, such as the one Halifax recently launched, will spell the end for them.

Cornell says: “In a bid to retain customers after an introductory rate period, lenders are starting to offer more attractive rates.

“At the same time intermediaries are being compensated for the role they play in helping customers to stay with an existing lender and avoid churn. Such moves may lead to a drop in remortgaging between lenders and knock another nail into the coffin of APRs.”

But Paul Fincham, spokesman for HBOS, denies this is the case.

He says: “The APR still provides an indication of total cost and gives customers an at-a-glance guide. It gives them the ability to compare products. We always want to see customers have access to that.

“We offer the same deals to new and existing customers so the APR is useful to both. It may not be the only point of comparison but it is still an important device and will not be made redundant by retention fees.”

Cornell also claims APRs are inaccurate – another reason they should be scrapped.

He adds: “The movement of standard variable rates in the future over two decades is impossible to predict, meaning that the calculation of the APR is flawed.”

Tamsin Hemsley, spokeswoman for Nationwide, says: “Fewer people these days take SVRs and mortgage APRs may be increasingly misleading but they can be a useful way of showing the overall value a lender offers.”


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