'Crackpot' EU mortgage rules given green light This involves each lender listing the maximum interest rate it has charged over the past 20 years - even though this has no bearing on its current deals. This figure will be displayed as prominently as other rates, and will apply to most mortgages sold in Britain. Ray Boulger, of mortgage broker John Charcol, described the new rule as an uncessary intervention by the EU. He said customers were already given one misleading rate when they were trying to compare mortgages, and that this "crackpot" rule would mean that they would have two. The only interest rate that truly influences the cost to the borrower today is the rate on the specific mortgage deal they have taken. For example, most borrowers lock into a fixed rate that lasts for two or five years, or one that is linked to the Bank of England Base Rate. However, lenders are already forced to list one separate and "misleading" rate in their literature. Current rules oblige lenders to quote an "indicative" annual interest rate - an APR based on the company's current standard variable rate (SVR). This is calculated by taking the total interest cost over the 25-year term of the mortgage, plus fees. Although this rate is displayed prominently, it is quite possible that borrowers will never pay it, because they start off paying a lower rate for a fixed period and then a higher rate for an SVR. In addition, vast numbers of customers remortgage after a fixed deal comes to an end. The EU rules will add a second layer of confusion to this equation. A new worst-case scenario rate will show what the repayments would be if the highest SVR rate registered over the past 20 years was used instead. This is expected to be nearly 10pc at most lenders. Again, there is very little likelihood that the borrower is forced to pay this exact rate for the duration of their loan. The EU said this will mean "home buyers [are] better informed about the costs and risks of taking on a mortgage, partly shielded against market swings that inflate their repayments." In a statement, the European Parliament said: "Anyone signing up for a mortgage in the EU should receive comparable information about the products available, and understand the total cost and long-run financial consequences of taking out the loan. Credit terms offered to borrowers would have to match their current financial situation and take account of their prospects and possible downturns. Only mortgages with a fixed period of more than five years are expected to be exempt. The mortgage companies will have until 2015 to comply with the legislation. Mr Boulger said: "The two APRs will be massively different and thus will result in most borrowers being totally confused." David Hollingworth, of mortgage broker London & Country, said: "Given the fact that the APR is of little help to borrowers in establishing the best deal for them based on the current interest rates, it's unlikely that an APR based on a worst-case rate scenario based on historic rates will be of much use." MEPs have now adopted the final wording of the proposals. They will now seek confirmation from each EU member state of how the rules will be enforced, which could differ slightly according to country. Comparing the cost of different mortgages is already hugely complicated, because some charge upfront fees while others prefer to charge a higher interest rate over the period. Using interest rates alone for comparisons may not give a good indication of the best deal overall because it does not reflect the total cost of a mortgage. As the mortgage market has surged this year, many lenders have used ultra-low headline rates to disguise eye-watering fees that make mortgages less cost-effective. In some cases, the benefits are entirely lost, research by The Telegraph showed last month. Some home owners signing up to deals boasting the best headline rates are finding themselves thousands of pounds worse off. In some cases, borrowers will not benefit from the low rates unless they have mortgages of £500,000 or more. Read more: How a low rate mortgage can cost you more