Home buyers baffled by complex mortgage deals
British home buyers are being left baffled by the complexity of mortgage deals on the market, with many unable to recognise the best deal, new research has revealed.
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Consumer watchdog Which? quizzed 1,000 people who had either bought their first home or remortgaged within the last five years, or were planning to get that first step on the ladder in the next twelve months.
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But asked to rank the cost of five two-year fixed-rate mortgages in order of good value, just one in 200 could correctly identify the best deal, and just over a quarter were able to name the cheapest and most expensive deals on offer.
Most lenders lure buyers in with a low rate of interest on their mortgage products, but what might seem like an attractive fixed-rate deal is in fact offset by set-up fees of up to £2,000.
As a result, many were unable to find the best value, despite the fact that most of the respondents believed the test was easy.
Richard Lloyd, from Which?, told the Daily Mail: "While it's good to see lenders now offering lower interest rates, mortgage arrangement fees have risen dramatically in the past two years.
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"Even people who already have a mortgage struggle to recognise the cheapest deal. Lenders should be more transparent about the true costs."
However, spokeswoman for the Council of Mortgage Lenders, Sue Anderson, insisted that Which? had given the respondents "very limited information" and that in real life, home buyers were given all the information they required to make an informed decision.
What do you think? Should mortgage lenders be more transparent in order that consumers can pick the best deal? Leave your comments below...
