percent a year to 7.25 percent, providing an effective monthly compounded yield to new depositors of 7.496 percent.

The announcement -- which would bring the Island's largest deposit company's rates in line with rival Butterfield Mortgage & Finance -- came as it said it was unlikely to consider providing the option of fixed mortgage rates to home buyers in the near future.

Butterfield said on Tuesday it would be offering customers the option of fixed rates in the New Year and wuld also be raising its rates for mortgages.

Bermuda Home president Mr. Arthur Haycock said his company woyuld also be raising mortgage rates to nine percent in January.

He said of the deposit rate changes: "We were looking at it and we think that because of what is happening in the marketplace, we had to follow suit. "If we are seeing increases in deposit rates being offered by some firms then we obviously have to compete by increasing our deposit rates to be able to retain our customer base and get new deposits.

"In order for us to pay the extra interest expense out, we have to recoup it from the loan and mortgage side. So we are looking at, in the New Year, taking our mortgages, presumably across the board back to nine percent.

"We began quoting about two months ago, 20 year mortgages at nine percent. We haven't gone up to nine percent for 15 year mortgages, yet. That remains at 8.5 percent.'' But it is clear that the 15-year rate will now come under closer scrutiny. Mr.

Haycock continued: "We think that at some point that nine percent rate will be under pressure as well, but we don't really want to go over that if we can avoid it.'' Mr. Haycock conceded that one of the difficulties with moving quickly to change the rates was that the company is still busy consolidating its operation, which was created through the merger of the deposit companies of the Bank of Bermuda and LP Gutteridge.

Mr. Haycock said Bermuda Home was not actively looking at establishing fixed mortgage rates.

In January, Butterfield will begin showing clients new options for fixed rate mortgages that would have participants locked into a mortgage rate for a period of time, no matter what the fluctuation in interest rates are during the specified period.

"We are not actively looking at it,'' said Mr. Haycock. "We have taken a look at it on occasion, but it becomes rather expensive to fix rates because we have to go into the market through the bank's treasury operations. There is, depending on the amount, the term and the current market rate structures, there are rate charges and fees to pay for that.

"At this point we just haven't had any interest in customers wanting to pay the additional cost of trying to fix it.

"It is something that we will look at in the New Year, when we move to review mortgage rates.''