Civil servants have been warned of further increases in their home loan interest rates. Deputy Secretary for Civil Service Duncan Pescod said the financial turmoil would push the present rate of 9.47 per cent to 10.65 next month. But he expected it to fall to the normal five to six per cent when a new calculation method is used from April. The government interest rate, based on the yields of Exchange Fund notes, is roughly three per cent below bank prime rate. But the gap is narrowing. It shot up from 6.075 in October last year to 9.475 this month due to market fluctuations. The rate in March will exceed the current prime rate of 10.25 per cent. An inter-departmental working group is reviewing the mechanism following staff complaints. Mr Pescod said a new mechanism would be in place in April to reflect changes in investment returns announced in the Budget. Without disclosing the details, he said the rate would drop substantially. 'I would certainly expect it to come down more towards the levels which we had traditionally had,' he said. Provisional legislator Elsie Tu asked whether government employees deserved special concessions. 'The public will be very surprised that they are going to pay to help somebody to get reductions,' she said. But Mr Pescod said staff were entitled to housing benefits and the rate would become more stable as it would be adjusted every six months instead of every month.