BM Solutions' One Specialist survey questioned 310 brokers on APR and whether it is appropriate today. Only 22% did not think that an alternative is necessary.
However, the vast majority of brokers (77%) were unaware of recent research released by the Council of Mortgage Lenders examining the use of a Dynamic Annual Rate (DAR) as a calculation. The DAR is calculated over any length of time that the mortgage is likely to be kept. In comparison, the APR is based on the assumption that a loan is held until maturity.
Commenting on the findings, Phil Rickards, head of sales at BM Solutions, said: "APR has been the established calculation basis in the industry for some time. However, more recently professionals have been questioning its validity in today's market place. Although we should steer clear of swamping the market with different calculations which may lead to confusion, another option may be worth considering if brokers believe it will support best advice – our research certainly suggests this is the case. However, any solution must also be helpful for the customer."
