EBS has withdrawn the service allowing existing customers to split their mortgage between fixed and variable rate loans. The change, which was made in November, is attributed to a high level of administration costs.

"We offer new customers a range of options including splitting the loan between a fixed and a variable rate. However, once its been set up they may only switch from a fixed to a variable or a variable to a fixed, not both," said an EBS spokesman.

In the past year, the building society has been cutting all nonessential services to reduce costs. Other services which have already been axed include ATMs and foreign exchange.

First Active and TSB, two other companies that have come under pressure to cut costs, are still providing the service to customers.

This option may give customers peace of mind regarding interest rates and monthly repayments.

A mortgage loan may be split by any percentage into two loans, effectively hedging a customer's bet against interest rates.

For example, if a loan is split into 50 per cent fixed and 50 per cent variable the fixed portion payment will remain the same while the variable will fluctuate up and down with interest rates.

If rates go up, the fixed payment remains the same - effectively reducing the payments compared to a 100 per cent variable rate mortgage. If rates go down, the variable payment may be below the fixed rate - effectively reducing the payments compared to a 100 per cent fixed rate loan.

Not everyone agrees with this mortgage strategy. REA Mortgage Services Ms Sarah Wellband says: "The only benefit of part-fixed, part-variable is if the borrower has the opportunity of paying off the variable within the fixed period."

This is not a strategy she regularly recommends nor does she receive many requests for it.

Some lenders will not provide this option to existing fixed customers because of the costs involved in breaking a fixed contract. First Active says every situation is different, but allowing this option for existing fixed customers depends on variables such as the length of time they have been in the contract. "It's unlikely and costly for them to do it," says a First Active spokeswoman.

TSB Bank "offers this service to new and existing customers providing they're not in an existing fixed. They'd have to pay fees to break out of a fixed", said a spokesman.

ACCBank does not have an official policy on splitting mortgages but leaves it up to individual branch managers to decide.