HAVING WRITTEN only last week about mortgages, I would normally be loath to return to the subject - were it not for the revelation earlier this week that the Office of Fair Trading is musing in public on whether to hold an inquiry into the subject.

Much of the OFT's work in the financial services field has been extremely helpful. One need only think of the way it forced insurance company salespeople and financial advisers to disclose the full price, including commission, of the products they sell. But occasionally the watchdog hits a bum note and mortgages is one of them.

The OFT's concerns, explained elsewhere in this section, relate to the fact that many lenders will offer fixed-rate loans with a lock-in that extends beyond the fixed period itself. In other words, if you take out a two-year fixed rate mortgage, a heavy redemption penalty may be applied for up to there or four years after the fix ands and you have moved on to a variable rate.

The danger of this, claims the OFT, is that it raises the possibility of mortgage lenders taking advantage of the lock-in period to hit borrowers hard after their fix ends, perhaps by raising rates far above the variable rates charged to other borrowers.

Formally speaking, this is true. Equally true is the fact that no lender I know of has actually tried to do this (I will probably be inundated with examples to the contrary by this time next week). The reason lenders haven't done so and are unlikely ever to try is that they are acutely conscious of the hostile publicity they would attract if they ever tried such a scam on.

The OFT, it therefore strikes me, is using a sledgehammer to crack a nut and, to take this analogy further, it risks smashing up a lot more besides the nut. What it is now suggesting is that any lock-in period should last no longer than the fixed rate itself. Therefore when the fixed period ends, borrowers could simply pay up and go, without attracting any further penalties.

It all sounds so wonderful. Moreover there are mortgage lenders today who offer this type of loan. Except - and this is the important point - the fixed rates on offer for these mortgages are generally worse than those with an extended lock-in period. In other words, if lenders aren't allowed to use extended lock-ins to recoup the money they have laid out to attract borrowers, they simply won't offer that outstanding fixed deal any longer.

Personally, I don't like extended lock-ins. But I am also aware that for many first-time borrowers they offer the possibility of a move on to the housing ladder at attractively cheap rates. As long as the pluses and minuses are clearly explained beforehand and as long as the lender doesn't try to take advantage, perhaps by having something to that effect written into the contract, what is the problem?

As I say, the OFT does important work. Maybe it should stick to that, rather than deny borrowers the freedom to seek out what is best for them.

For the last few weeks, we have run a column called Stepping Stones in our property section, where readers tell us how their moves up the housing ladder over the past decade or so have fared. We are now offering a (token) pounds 100 prize to the reader whose moves have netted the largest increase in property values (from first buy to current valuation), since January 1988. The deadline for entries is October 31st. Write to Stepping Stones, Your Money, The Independent, One Canada Square, Canary Wharf, London E14 5DL.

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