23rd November 2015
Trade body the Council of Mortgage Lenders (CML) and Which? have together launched a new standard format for how home loan providers communicate their fees, in a bid to make it easier for customers to understand and compare deals.
Following a Which? campaign to end the confusion around mortgage costs, the Chancellor, George Osborne asked the CML and the consumer watchdog group to work together to find ways to make it easier for consumers to understand and compare the costs of different mortgages with different lenders.
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Since then, the two organisations have worked jointly to address this problem and have now introduced a “tariff of mortgage charges”.
There are two key improvements within the tariff, these include:
The new tariff has been tested on consumers, and according to the groups the results show that borrowers found it much easier to understand and compare costs than when they used existing versions.
Lenders representing 85% of the market have already committed to introducing this tariff and putting it on their website by the end of the year, and it is anticipated that others will also choose to adopt it.
The CML and Which? have submitted a joint report to the Chancellor outlining the work on the new tariff as well as progress towards making it easier for people to compare the total costs of different deals over different deal periods.
They plan to agree a standard comparison method early next year for lenders to adopt in 2016.
Which? executive director, Richard Lloyd, said: “Thousands of people supported our call to end confusion around the cost of mortgages, so we’re pleased that our work with the CML has resulted in simplified fees and charges. This new approach should make it much easier for people to compare mortgage fees. We hope that all mortgage providers will make these changes as soon as possible.”
CML director general Paul Smee added: “Lenders have successfully pulled together to put in place some sensible measures to help consumer understanding. We very much hope that the new tariff and standard terminology will make it demonstrably easier to understand and compare mortgage costs. Working jointly with Which? has been invaluable.”