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by Bob Bardsley
Know Your Money Editor

With all the talk of the credit crunch, homeowners could be forgiven for thinking the time is not right to be looking at any kind of loan, let alone one the size of a mortgage. But would they be wrong to see things that way? Much of the media coverage given to the property market relates to first-time buyers or those looking to relocate. What is the situation for those who are happy to stay put, but who might want to remortgage to cut their monthly outgoings or the interest rate they are exposed to?

Perhaps unsurprisingly, there are conflicting statistics being published relating to the remortgaging market. Industry bodies claim that activity is down, while HSBC suggests that its own share of the sector has increased in recent months and that lending is still in the hundreds of millions of pounds each day. Here are some of the headline figures, along with advice from some of those in the know.

Is anyone remortgaging?

Despite the prevalence of first-time buyer and home-mover news in the national press, it seems there are still people out there remortgaging. Whether they are emerging from fixed-rate deals or simply looking to make the most of what's on the market is unclear, but HSBC claims to have given out more than £100 million a day to remortgagers in April and May of 2008 as part of a long-term trend of enjoying an increased market share than was previously the case.

The evidence does seem to suggest that homeowners are being more picky about who they take their loan out with, as across the industry as a whole remortgaging activity is down. Recent figures from the Council of Mortgage Lenders reveal a 28 per cent slump in mortgages approved in the first half of 2008 when compared with the previous six months. It might be worth bearing in mind, however, that that statistic includes not only remortgaging but also new loans approved for house purchases.

What does it cost?

While relatively high rates of inflation may have many consumers concerned about the cost of obtaining a new mortgage, research conducted by London & Country suggests that, a year into the credit crunch, property is not among the most significant factors playing a part in tightening household finances. The lender reveals that less than 12 per cent of individuals have experienced monetary difficulty due to rising mortgage rates. This compares with more than 45 per cent who have faced affordability concerns due to increasing food prices.

"The biggest impact has so far been that of food, utility and fuel costs rather than increased mortgage rates," London & Country asserts, while its spokesperson David Hollingworth recently told the Observer that now might in fact be a good time to remortgage. "Some daylight has opened up for homeowners in the last few weeks and there is now a much bigger margin between the cheapest rates and lenders' standard variable rates," he told the publication.

Who should I borrow from?

There have been a number of lenders cutting their rates recently and, with new rate cuts announced on an almost daily basis, it might be a good idea to check the comparison tables to see what the newest market leader is. At the time of writing, the most recent announcements include Alliance & Leicester's reductions across its fixed-rate range. Available at loan-to-value ratios of up to 75 per cent, these include a two-year package at 6.19 per cent with a £599 arrangement fee and another which charges a fee equivalent to one per cent of the loan and an interest rate of 5.99 per cent. The three-year 6.89 per cent package, meanwhile, is fixed until October 2011 and does not incur a fee at all. The lender asserts that the products were previously subject to interest charged at 6.64, 6.14 and 7.09 per cent respectively.

Godiva Mortgages, the lending arm of Coventry Intermediaries, has a three-year fixed-rate mortgage at 5.99 per cent or, for those who are in for the long haul, a ten-year package at a rate of 6.09 per cent. Godiva offers a free remortgaging service and free valuations on properties, while the ten-year deal is free of early repayment charges after the first five years. Managing director Colin Franklin explains that the reductions in its interest rates came from Godiva's desire to pass on falling swap prices, the charges faced by lenders which are partly responsible for governing the costs passed on to consumers.

In conclusion...

As always, individual circumstances are likely to govern the decision-making process for many Britons. By comparing mortgages from different lenders and keeping abreast of the latest offers and interest rate cuts, however, the chances of finding the most competitive loan possible might be increased. With the market in a constant state of flux, the industry-leading product may yet be set to change in the coming weeks.

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