THE Consumer Association has claimed that some mortgage holders are unknowingly subsidising the introductory lower interest rates being offered to new borrowers.
The association wants all lenders to voluntarily reveal the APR (annual percentage rate) on existing mortgages in annual statements so customers can compare them against published rates.
In a highly critical report on the mortgage market in the May edition of Consumer Choice magazine, the CAI found that, of 13 mortgage lenders surveyed, none provided APR rates on statements and only six included the lower nominal rate of interest.
The CAI has said the seven who don't are ACCBank, AIB, Ulster Bank, Irish Nationwide, First National, Irish Life Home Loans and National Irish Bank. But yesterday ACCBank said it would inform customers about the APR in the future.
Yesterday, Consumer Association director, Mr Eddie Hobbs, said many mortgage holders were paying interest rates in excess of published ones and should review their contracts. Where there is an anomaly, they should request their rate be reduced, he said.
The survey shows that many lenders continue to apply a number of discretionary fees to existing mortgages, in particular for the redemption of fixed rate mortgages, switching from an endowment to annuity mortgage or for valuations and arrears.
The Consumer Choice report also surveyed lenders about the sale of insurance products and, in particular, the levels of commission received.
While most lenders declined to reveal these figures, the survey showed that lenders are earning commissions of up to 90 per cent of the first year premium on mortgage protection policies, 25 per cent commission one home insurance premiums and up to 20 per cent of the premium for once off products like indemnity bonds.
Background commission payments for a typical £50,000 mortgage can amount to 0.5 per cent of the loan, in many cases on top of an arrangement fee of 0.5 per cent.
The CAI is calling for the compulsory disclosure of commissions to be reinstated in the new Consumer Credit Act.
