I've no sympathy with companies like this but aren't all lenders the same?
If Wonga lend you £100 and want £200 back in 3 months it's a massive APR and they get criticised. If a bank or building society lends you £100k and you pay back £200k over 25 years it's a lower APR and everything's ok. At the end of the day you're still paying back double what you borrowed.
Based on that logic a £100k mortgage from wonga you would be repaying £40m + over 25 years. A slight difference!
You are right that you most likely will pay back double (at least) on a traditional mortgage if it runs to full term (many don't). The lender is committing funds for 25+ years and need a decent return; as a rule of thumb most people won't invest in a new business unless they get a 20%+ return on their investment so the bank return doesn't look so great....but the bank's investment (which is what it is) is relatively safe (secured by bricks and mortar) so a lower return is acceptable.
All things being equal inflation also erodes the value of the bank's investment over such a long period. It used to surprise me how borrowers never appreciated that a period of rampant inflation would be a good thing for them in terms of their debt.
At the end of the day, if someone wants to buy a house they can just pay cash if they don't like bank/building society deals.
Ps my son has just fixed at 1.5% for two years without changing lender - great deals out there!
