APR and nominal rates

[yeffoc]

Re: Best Value Fixed Rate Mortgages-3 Year Term

I notice in the Irish Times PriceWatch Finance table, that for three-year fixed rate mortgages of €250k over 20 years, EBS Building Society have the lowest APR at 4.4%, (National Irish's APR is 4.44%), but yet EBS has the highest interest rate of 4.9% (NIB's is 4.55%) and ESB has the highest cost per €1000 borrowed at €6.54 (NIB's is €6.38). How can EBS have a lower APR given the above?

 

[marksa]

there's plenty of discussion on this one elsewhere here, but really the piece to compare is the rate for the fixed period, because the APR is actually calculated based on the whole term e.g. 20 usually. In NIB, the remaining 17 years is at variable rate of say 4.49%, so the rate for
3 years = 4.55
17 years = 4.49
Average roughly 4.499

EBS have
3 years 4.9
17 years at 4.32
Average = 4.40

So you can see that EBS has a much lower Variable rate for the remaining 17 years. This for some people is irrelevant in that you can alway renegotiate your terms after the 3 years are up - new fixed rate, ECB tracker, another bank etc. So concentrate on the actual rate for 3 years i.e. 4.55 Vs 4.9.