Is fixing a mortgage interest rate now, for drawing down in 12 months time, worth a fee of £250? Irish Permanent believes it is and is aiming this new guaranteed-interest product at the increasing numbers of people who are buying new houses from builders' plans but may not be in a position to take possession of the house for another year.

By fixing the three or five-year rate now, only to be drawn down within 12 months, the Irish Permanent claims prospective buyers could effect significant savings if interest rates rise over the same period. (If fixed rates drop over the year, you benefit from the decrease, but do not get the £250 back.)

The £250 charge for a 12-month rate lock-in - or the equivalent of a half of a percentage point on a typical £50,000 mortgage - seems a bit steep, but a spokesman for Irish Permanent told Family Money that it only just covers the company's own costs in providing the interest rate hedge. The Permanent's view is that rates are likely to rise over the next year and that by locking in a mortgage at the 7.25 per cent rate for either three or five years the customer could end up saving £860 and £1,600 respectively if rates were to go up by just one per cent.