An innovative new product which insures homeowners against the risk of interest payments on their mortgages going up has proved popular since it was launched by Bermuda-based derivative instrument company Armadillo's MarketGuard Insurance this month.

The Interest Rate Insurance product, which can be used for variable mortgages, comes in British pound sterling only and runs for two years, has been a success, particularly with brokers using it for their clients, according to joint owner Nick Faulks.

It works by making up the difference in payments if interest rates go up by more than the selected level of excess, and is easy to use while it cuts down on paperwork by depositing the money straight into the customer's bank account, instead of them having to fill out a normal claims form. From the information given, MarketGuard will calculate how much the payments have increased and will pay the remainder.

"I would say there has been a steady trickle of business for the product, which is pretty much what we were looking for," said Mr. Faulks.

"There has been an amazing amount of broker enquiries. The idea in place was that obviously people would buy it online, but brokers are also taking up on it as well. As far as the launch goes, everything is going swimmingly."

The product officially hit the market on Wednesday last week and has been snapped up in advance of the Bank of England's decision on interest rates today, said Mr. Faulks.

"To be honest, from what the brokers are telling us, they are in no doubt whatsoever that they think they have got lots of people who are interested in it," he said. "We have had a lot of calls to the call centre and a large number of hits on the website.

"We are all waiting for the Bank of England's decision on interest rates tomorrow - needless to say the office is getting quite busy getting prepared for that. We are not expecting a change, but if there is the rates will have to be revised rapidly and that will be our first experience of that."

Over a two-year period, for an average mortgage repayment of £100,000 in the UK, the product costs £9 per month or a single premium of about £220.

Mr. Faulks, and Chris Taylor, his chief executive, have also managed to get the Treasury and HM Revenue & Customs to allow their products to be treated as insurance and not investment, or they would have been subjected to income tax.

For more information about MarketGuard's Interest Rate Insurance product visit www.marketguard.com