Those who like the security and peace of mind of a long fixed period loan (say for ten years) will right now quite possibly find themselves paying a 15 percent rate (i.e. 4.5 percent above the current rate and five percent above what many believe the rate will be in three month's time).

"Any borrower wanting a fixed rate has, therefore, to become an amateur economist and to try and assess where interest rates will go once the deflation in house prices ends (probably by early 2010) and the economy starts to show inflation generating real growth ? which most people believe will take another year."

Clarke revealed that he has never fixed rates himself, preferring to try and negotiate the most favourable terms possible at the time of purchase. He is, however, sympathetic to the desire of those on limited incomes to fix their rates, provided they remember that 'banks are not in business to lose money'.

Editor's note

Although nobody, including Gill Marcus I suspect, knows whether we're at the bottom of the rate cycle, the mainstream view is that we most definitely are. If you're thinking of fixing, now is the time.

Take note, however, what Clarke says: "Banks are not in business to lose money." In other words, the only way a bank will fix the interest on your mortgage is if they fix it at a rate at which they'll probably make more money in the long run. By fixing your rate, you'll probably lose.

The only good reason to fix one's rate is if you absolutely have to be certain what your repayments will be, even if it costs you more in the end.

Like Clarke, I'll always rather go for a variable rate at the best possible terms.