Brokers have revealed their concerns over new regulation that is set to be implemented early next year. March of 2016 will see the new European Union (EU) Mortgage Credit Directive (MCD) come into force.

It is being introduced with the intention of providing sufficient warning to borrowers of what could happen if the mortgage rate was to rise to a previously historic high.

Lenders will have to display a second Annual Percentage Rate (APR), which is the highest rate that they have applied over the previous 20 years, in instances where the borrowers are looking at a variable loan rate.

Some brokers, however, say they feel the move will be more a source of confusion as opposed to informative.

Ray Boulger, of brokerage firm John Charcol, said:

“We’re going to have lenders quoting the actual interest rate, the APR broadly calculated as at present then a second APR based on the highest rate over 20 years. The consumer is going to get completely confused.”

He added that the move would mean that lenders would have to print at least three different numbers on mortgage documentation, including the already used standard APR.

As a mortgage advisor working within the industry, such a change would have to be incorporated into your interview routine, to ensure it is sufficiently covered and explained to those looking to obtain a mortgage.

Before you are able to speak with customers, you must first complete your CeMAP training and pass the end exam. Then, you will be able to conduct customer interviews and undertake all additional regulatory requirements.

Leave a Reply

Your email address will not be published.