David Boyle, group manager of investor education at the Commission for Financial Capability, said doing the sums could be a worthwhile exercise for a lot of borrowers.

"It is a pretty competitive market at the moment. If there is a 1 per cent or 2 per cent difference [in interest rates] you could find you pay off the break fee within three or six months. It can make such a material difference."

He said banks would not broach the conversation about breaking a rate, but a borrower could seek help from a mortgage adviser to review their circumstances.

Broker Glen McLeod, of Edge Mortgages, said he had seen a big increase in the number of people inquiring about breaking their loans.

He said in most cases people would not avoid paying the interest they had signed up for on a fixed rate, but the move could make a difference to their cash flow.

"If the break cost is $1000 and you have 12 months to run on your loan and payments come down by $80 a month, that only saves you $960 and all you are doing is prepaying the interest. Banks never lose on it."

Bank contributions

McLeod said the answer sometimes lay with asking another bank to stump up a cash contribution to cover the break fee.

Many of the banks offer tempters of a couple of thousand dollars to people who switch their loans.

McLeod said many of the banks also had teams of people working to keep customers, so someone who threatened to leave might be able to negotiate a better deal from their own bank. 

"It's a fine line the banks are playing because if they set a precedent and start paying break costs for customers it ends up with what's the point in having fixed rates in the first place?"

He said he dealt with one customer this week who was faced with a $6000 break fee. Another bank offered $4000 to move, but the customer had to pay legal fees as well.

They were fixed in the late 5 per cent interest rate range and were looking at moving to 4.35 per cent. "The difference is quite large but you have got to balance it out."

Massey University banking expert Claire Matthews said there was no right answer.

"It comes down to individual circumstances, what rate they are on and what they are going to."

She said people would sometimes break their fixed terms when they saw interest rates starting to climb because they decided they would be better to fix immediately than wait until the end of their loan term, when rates might be even higher.