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Jessica Darnbrough
Mortgage Choice’s chief executive officer Michael Russell is calling for an end to mortgage comparison rates.
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Speaking to The Adviser, Mr Russell said comparison rates were no longer relevant to brokers or borrowers and should be removed.
“Our customers are not placing a huge amount of relevance in the comparison rate anymore," he said.
"I would welcome a review into the ongoing relevance of comparison rates."
Comparison rates were first introduced in 2003 under the Uniform Consumer Credit Code to help consumers understand the true cost of their mortgage.
However, according to Mr Russell, comparison rates do not include all the costs associated with a mortgage, such as exit fees, and therefore they can not be considered to be a true reflection of the cost of a mortgage.
And Mr Russell is not alone in his stance on comparison rates.
Liberty's chief operating officer James Boyle said the company would also welcome a review of the value of comparison rates in the current environment.
"They are expensive to maintain and in our experience borrowers neither refer to nor rely on them. In fact, with recent changes in regulation placing higher emphasis on the assessment and suitability of loans I’d be surprised if a review didn’t find comparison rates redundant," Mr Boyle said.
