Comparison rates not helping: Broker
The new comparison rates home lenders must now show are overloading borrowers with too much information and are proving of little help to consumers, according to mortgage broker Smartline Home Loans. Legislation requiring all home loan ads and promotional material to carry comparison rates came into effect on July 1.
A strict formula is used to combine all the main interest and fee costs of a loan into this one ‘true' rate to make it easy for borrowers to compare. “The standard lender’s comparison rate schedule will involve somewhere between 100 and 200 different interest rates, most of them not all that different from the face value rate,” says Chris Acret, Managing Director of Smartline. As a result comparison rates are being ignored and borrowers are being pushed more towards using brokers, he said.