beating the Bank of Bermuda's recent half-percent cut.

But the maximum 0.75 percent reduction will only apply to people due to pay off their mortgages soon -between a year and five years from now.

And the cut will not take effect until mid-January, the bank's chief general manager Mr. Michael Collier announced on Tuesday.

People whose mortgages mature in five to 10 years will get a half-percent reduction, he said. Those whose mortgages mature in 10 to 15 years would get a 0.25 percent cut. Mortgages that matured after 15 years would not get a reduction.

The current mortgage rate stands at nine percent.

The bank is also cutting the rate on loans by half a percent, starting on December 1.

Reductions will only be made if payments have been kept up to date.

Mr. Collier said the bank had been talking about reductions "for some time'', and would have made the move sooner or later regardless of the Bank of Bermuda's decision last week.

"We have to be competitive and price our products accordingly,'' he said.

"The new rates provide our borrower with very competitive rates and increased flexibility.

"For some time now, we have assisted in restructuring repayment terms for borrowers experiencing repayment problems related to the recession. Our new rates will reflect the general needs of borrowers, both in terms of conventional-style loans and mortgages.

"We will also continue to be flexible in restructuring repayment terms to adapt to customer needs. For example, with lower rates, customers will have the advantage of maintaining existing monthly repayment amounts, thereby reducing the term of the loan or mortgage.

"Customers wishing to improve their monthly cash flow by taking advantage of the rate reductions should contact their loan or mortgage officer.''