Mission Banks | Finance & Risks
Definition of the target method for calculating APR in the context of renegotiations of mortgage loans
Regulatory changes to European directives and their national transposition have provided further details regarding the methods used to calculate APR/AAR information in mortgage loan offers. The authorities have been paying particular attention to this contractual information for a number of years. An increase in customer disputes has been observed due to companies’ sometimes non-compliant practices. These disputes generate legal risk with significant financial consequences. Banks have made significant provisions to cover this risk.
In response, banks are seeking to specify the standard for calculating APR and AAR in accordance with the regulations in force, as well as the standard for presenting information to customers, and to assess the consequences of changes to these new calculation rules (costs, risks, IS impacts, etc.).
Through their analyses, the Ares & Co teams were able to overhaul the method used to calculate APR/AAR through: