Andrew Hagger of Moneyfacts.com said that the addition of information concerning the true cost of the introductory deal would help borrowers weigh up the pros and cons of particular products.
He explained: "This calculation is more in line with consumer behaviour. Very few people will remain on their mortgage deal once the introductory rate expires.
"Most borrowers will move to a new product rather than paying their lenders standard variable rate for the remaining period of their loan."
He also championed longer-term borrowing, calling for lender innovation to promote the benefits to consumers - suggesting that the introduction of a clause allowing the borrower to switch to another of the lender's products in the event of significant, uninsurable, circumstantial changes such as the breakdown of a marriage.
Finally, Hagger urged for the standardisation of adverse categories within the non-conforming market, proffering four distinct categories for possible industry-wide adoption:
- Light: 2 CCJs, maximum £3K
- Medium: 3 CCJs, maximum £5K
- Heavy: 4 CCJs, maximum £10K
- Extra heavy: Unlimited CCJs, over £10K
“Since County Court Judgements (CCJs) are the main reason that the majority of consumers initially resort to a non-conforming lender, these form the basis of our benchmarking for these categories.
"Other adverse measures such as arrears, bankruptcy or individual voluntary arrangements (IVAs) are considered by lenders in line with the severity of a consumer’s overall credit position on a case-by-case basis.
“Going forward, industry-wide definitions of levels of adversity will help consumer understanding and facilitate easier product comparison."
