The number of people complaining about the fees charged for breaking a fixed term mortgage with their bank has spiked in the wake of falling interest rates.

The Banking Ombudsman scheme said it had received 24 cases relating to early repayment costs since July 1.

That compares to 28 early repayment cases for the whole of the year to June 30.

Mortgage interest rates have fallen rapidly in recent months after the Reserve Bank began cutting the official cash rate in June.

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Home-owners can now lock in a mortgage for as low as 4.35 per cent for a year with either ASB bank or the BNZ if they meet special conditions.

This time last year the average one year fixed term mortgage rate was 6.04 per cent across the banks, according to Interest.co.nz.

The fall has prompted mortgage holders to break their fixed term agreements to shift to a better rate.

Banking Ombudsman Nicola Sladden said people were generally aware there was a cost to breaking their loan early to get a better deal.

"But they don't always accept how it is calculated."

Sladden said the banks used quite complex formulas for working out the costs and the formulas varied across the banks.

"It is not just retail interest rates that influence it."

Sladden said people should ask their bank to explain how the fee will be calculated before they sign any loan documents.

"I think people are aware there is a cost associated with it. The miscommunication is how the break cost is calculated and how it can change over a short period of time.

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"The key is for banks to explain how the cost is made up so people can understand it."

The ombudsman scheme has produced a quick guide for people who are concerned about the costs associated with breaking their fixed term mortgage.