according to some real estate agents. Senior journalist John Burchall reports The Bank of Butterfield's 25-year mortgage policy will help the real estate market thrive, one Real Estate Agent said yesterday.

Altimont Roberts, vice president of John W. Swan Real Estate, said that overall the move would help the market become more upscale.

"This shift in policy will help the first time home buyer which is precisely the market that needs movement,'' he said.

"First time buyers usually purchase at the low end of the market ($250,000 -$400,000) and that affords those people who previously owned those properties to move up and that helps the market overall.

"This is what we call up scaling. Once the first time buyers are turned on it helps everyone else.'' Mr. Roberts applauded the move from 20 to 25 years because he said it would assist the industry's prosperity.

Meanwhile Arthur Haycock, president of Bermuda Home Ltd., said that his organisation already had a 25-year mortgage term which had been in existence for two years.

However, it was reserved only for those first time buyers who preferred more manageable and smaller monthly payments.

"We generally advise people who borrow money from us to be very cautious about taking a mortgage over 25 years,'' he said.

"While you save a little bit on your monthly payments a borrower pays a considerably larger amount back to the bank over the term of the mortgage in interest.'' Mr. Haycock said given this reality only those who had the greatest difficulty meeting the larger monthly commitments were allowed to go beyond the standard 15 or even 20 years to 25 years.

"However that interest factor just kicks way up,'' he continued. "You almost pay no principal off during the first five years.

"It sounds good when it is being marketed but when you really look into it it's not for everybody. It's really for only a limited number of people. But it's a huge expense.'' Jennifer Patterson, a certified financial planner of First Bermuda Securities, said that many of her clients found that longer term mortgages were preferable because they could handle the payment plan much better.

"Often our clients take out long term mortgages because they can handle the monthly payment better and they believe that the extra funds can be invested at a rate higher than the mortgage.

"But many of them find it difficult to stick with their savings commitment and therefore could use the discipline of a shorter payment period.'' Mrs. Patterson said that the longer term did have the advantage of reducing the monthly commitment but the downside was the ultimate price paid for the house.

As an example, Mrs. Patterson said that a $300,000 mortgage at nine per cent over 25 years worked out to $2,517.59 per month. However over 15 years a $300,000 mortgage worked out to $3042.80 -- a difference of $525,21 per month.

But the ultimate price of a $300,000 mortgage in 25 years works out to be $755,276.72 of which $455,276.72 is interest.

Similarly, in the case of a 15 year $300,000 mortgage the buyer would pay $547,703.95 of which $247,703.95 was interest.

Thus, Ms Patterson pointed out the extra $525 per month paid over 15 years instead of 25 years saved the borrower more than $200,000 in interest.

Andrew Horsefield, sales manager at Bermuda Realty, said the most interesting feature of the change was its flexible interest rates.

"I think that the best thing that has happened for Bermuda is that there is now competition and the interest rates are not all the same.

"By pushing mortgages out to 25 years it means the consumer benefits because he has even more choice and I applaud that.'' On Thursday the Bank of Butterfield announced the introduction of a new 25-year mortgage.

Its aim is to make home ownership easier and more accessible for first-time buyers.

It is intended for new borrowers or those with mortgages elsewhere who wish to refinance, the bank said in press release.

At the same time the Bank of Butterfield unveiled a new pricing structure for two, four, and five-year fixed mortgages, replacing its one and three-year mortgages and reducing its fixed rate on the new line.

The bank's new two-year mortgage will carry an interest rate of 8 percent while its four year mortgage weighs in at 8.5 percent. Meanwhile the bank has reduced by 1 of one percent its five-year lending rate, now pegged at 8.75 percent.

Bank of Butterfield chairman, Sir David Gibbons REAL ESTATE RE