UK mortgage market gets set to become more transparent

UK mortgage market gets set to become more transparent

The Council of Mortgage Lenders and the consumer watchdog Which? are to come together to help make the mortgage market in the UK a lot more transparent for buyers. 

The move would make it easier for people looking to purchase a home to understand the terminology, payments and other ins and outs of borrowing. If successful, it would theoretically make borrowing seem like a far less intimidating thing for many people, making it easier for them to be able to understand what it is they are borrowing and what they will have to pay each month. 

"This collaboration with Which? has helped lenders focus on practical and simple ways to help customers by making information more transparent and consistent. We hope customers themselves will find it easier and less daunting to make informed choices about their mortgages as a result," said CML director general Paul Smee.

Which? said one of the biggest issues in the market for borrowers is that they are confused about the full cost of taking a mortgage. Many feel there is more to pay than they are initially told, which can turn people away before they have even tried to buy. 

"Which? has been working with the CML to simplify the wide range of complicated fees and charges in the market so people don't pay over the odds on their loan. We look forward to all mortgage providers making these changes so that people can get the best deals more easily," said the consumer Watchdog's executive director Richard Lloyd. 

So how would mortgages change in order to reflect this and help make them more transparent? According to the two groups, the main changes would surround not only making the costs more obvious, but also putting a focus on widespread use of consistent terminology. 

They said that if the same terms are used to describe the costs and fees across the board, more people will feel comfortable shopping around and comparing to ensure they get the best deal, which is likely to give a boost to the market by encouraging buying and borrowing.