The Annual Percentage Rate is the indicator to compare interest rates. It looks at a whole mortgage deal, including set up costs, introductory deals and how often interest is calculated. It then calculates the average interest rate over the term of the deal. This allows the consumer to look at a variety of different deals and to make a real comparison.

However do not forget that each borrower has a different set of priorities, so it is important to look at all factors within a mortgage product. For instance if you need a fixed rate deal to budget more easily and a repayment deal for peace of mind, then compare the APR within these constraints for the best product for your circumstances.

The APR can only make a calculation over a twenty five year term using the interest rates that are being charged now. It can not take into account any rise or fall in interest rates. It should be used only as an initial measure of a product.