What Is APRC And What Does It Mean For Your Mortgage?
28th September 2017
What is APRC?
APRC stands for the Annual Percentage Rate of Change.
You’ll often see the APRC alongside the initial rate on mortgage deals. The initial rate only reflects the rate you’ll pay for that term of your mortgage, while the APRC shows the average interest rate calculated over the entire mortgage term - including your initial rate but also the lender’s SVR you’ll be moved onto once your initial rate has come to an end.
Why do mortgage deals show the APRC?
The Mortgage Credit Directive (MCD), created to protect consumers’ mortgage interests, made it compulsory for lenders to show the APRC on mortgage deals in March 2016.
Is looking at the APRC important when choosing a mortgage?
APRC shows the rate you’ll pay for your mortgage over the entire term including fees, so it sounds like it should be useful. However, as the APRC covers the whole mortgage term - both your initial rate and the SVR - it’s less helpful in showing you what you’ll be paying and when.
It’s unlikely you’d stick with the same deal for your entire mortgage lifetime because you’ll almost always want to remortgage before slipping onto your lender’s higher-rate SVR at the end of the initial term.
The most important thing to look at when deciding on a mortgage deal is the true cost - the total cost of the mortgage over the initial term, including any fees you may have to pay.