Mortgage interest rates are coming down every week with fixed rates as low as 56 per cent for up to five and even 10 years.
But recognising that not everyone wants to tie themselves into such a long fixed period - whether because they fear rates will drop even further or simply because they may need to dispose of the property before that period and will have to pay penalty payments to break it - the ICS Building Society has brought out Flexifix, a two-year fixed rate mortgage which gives you the option to switch to a variable rate with no penalty if the variable rate falls below the fixed rate of 5.5 per cent.
A flexible rate like this may be slightly higher than conventional fixed rates, but will attract people who are budgeting very carefully and need every extra bit of savings on their monthly loan repayment. One reader who took out a 10-year fixed rate back in 1993 when unlike today, mortgage interest rates were more than 15 per cent for a period and is very sorry today that he made such a long commitment is Mr O'M of Co Cork (58), who is still paying 9.75 per cent for his mortgage. He has appealed to his lender to reduce the penalty he must pay to break the contract, but to no avail, despite "pointing out that I've done all my financial transactions with them for all my working life and appealed to their sense of fair play to maybe consider the business they received from me and my family over the years, but there is no budging them".
"What I find most difficult to swallow is the great offers they are making to potential new customers and the dogmatic approach they take to people like me who have been customers for years and get no benefit from the reduction."
Mr O'M's penalty amounts to several thousand pounds - the difference in interest payments that his bank will lose over the period because the contract has been broken. He accepts that the bank sourced the money at high interbank rates back in 1993 and will not be able to lend it at anywhere near the same profit today, but nevertheless feels they should be more understanding of his position. "I suppose the old adage, `eaten bread is soon forgotten' applies," he writes.
