The cost of new base-rate trackers and some fixed-rate mortgages has also edged upwards, despite two reductions in base rate since last year. This is because lenders are more reluctant to lend money to each other, which is pushing up the cost of funds.

However, despite fewer products and higher rates, it is still possible to find a competitive deal. Those in the strongest position are homeowners with significant equity in their home or savings – 25 per cent or more of the property value – as they will have the widest choice of mortgage deals. Lenders such as Nationwide offer preferential rates to those borrowing less than 75 per cent of the value of a property because such borrowers are regarded as being lower risk and therefore highly attractive.

It is also important to ensure your credit history is good. Lenders are looking more closely at applicants’ credit files and may refuse to lend if you have missed several payments in the past – not just on your mortgage but on utility bills or credit card payments. It is important to pay all bills on time to ensure you don’t cause yourself problems later on.

Because there are fewer mortgages available, it important to seek independent advice from a broker such as Savills Private Finance which has access to an extensive range of mortgage deals. This will ensure you get the right deal for your circumstances. It is also important to leave plenty of time in which to remortgage: the worst thing is to ignore the situation as it will mean you go onto your lender’s standard variable rate at the end of your fixed or discounted term.

Most lenders let you reserve a rate up to six months before you come to remortgage so you could secure a rate now which may look very competitive in six months’ time if the liquidity squeeze has worsened. And if the situation eases, you are under no obligation to take this mortgage out but can simply choose the most competitive rate available at the time. The cost to you is the valuation fee which will depend on the value of your property and any non-refundable application fee that the lender may impose.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

(March 2008)