Everyone is feeling the bite of a slowing economy; even banks are finding it tough as funds start to dry up.

According to the Council of Mortgage Lenders (CML) gross lending declined in February to £24 billion from £25.6 billion in January.

This has led many lenders to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity,” CML direct general Michael Coogan said.

Banks are facing higher interest rates to fund their own loan book.

This cost is passed on to the customer.  This begs the question, what influence does the Treasury have against the raging tide of the free market?

The answer is not much.

A bank is like any other business, it must pass costs to its customers to maintain profitability. A bank that doesn’t will suffer in the current economic climate of low consumer confidence and high borrowing costs.

We are seeing the effect of high borrowing costs in other countries. In the US the Reserve Bank is lowering the interest rate but banks cannot follow suit and offer customers the same savings because of the cost of borrowing.

To combat this problem the Reserve Bank is offering cash to US banks to help sure-up their balance sheets.

Central banks are being marginalized by the power of the free market.

So this raises another question. Will higher base rates from the Bank of England help curb the inflation rate? Only time will tell…

The latest inflation figure released by the Office of National Statistics suggests Britain’s homeowners might not receive any interest rate cuts in the near future.

The latest figures showed inflation at 2.5 per cent.  Well above the Bank of England’s comfort zone of 2 per cent.

This is the second rise in as many months with the figure rising from 2.1 to 2.2 per cent in February.

Inflation is notoriously hard to manage with the trends difficult to reverse and although there is a new method of calculating inflation by the Office of National Statistics it is clear that inflation is on an upward move.

If the Bank of England starts rising interest rates to stem inflation there is a real possibility interest rates will be increased several times before inflation is back under control, particularly within an environment of rising energy costs.

In economic conditions like these it is important for homeowners to recalculate their home loans and determine what they can comfortably afford if rates increase.

This is a pattern that is forming across most of the industrialized countries at the moment.

As rates rise more and more homeowners are suffering from mortgage stress.

Buyers should calculate their repayments at 3 to 4 per cent above current interest rate levels to ensure they will be able to maintain repayments when the official rate inevitably rises.

It’s getting tougher to find a mortgage.

In the past six months, nearly one in three applicants has been rejected by lenders, who are tightening their loan criteria.

The combination of the US credit crisis, which has seen a record number of poorer mortgage holders default on their payments, and the stock market turmoil and housing market certainty on this side of the Atlantic is making lenders very nervous indeed.

As a result, according to today’s Daily Telegraph, an estimated 372,000 of the 1.2 million people applying for a mortgage between April and September were turned down.

This compares to an estimated 230,000 people – or one in five applicants – who suffered a similar fate in the six months to March.

More and more lenders are deciding whether to lend on the basis of what they think people can afford rather than just their earnings.

That means they’re looking very closely at prospective borrowers’ existing debt levels – and how they’re coping with the repayments.

But that doesn’t mean that if you’re finding it tough to get a mortgage you should grab anything you can get.

Do your best to get your finances in good order before you go looking.

And, if you want to get the best possible deal for your circumstances, it’s more important than ever to enlist the help of an independent expert.

The stock market turmoil is forcing up the interest rates at which banks borrow to fund mortgages.

And that means the rates they charge customers are on the increase too.

Earlier this week, Abbey announced its mortgages were about to get more expensive, and other lenders – including Halifax - look set to follow.

So it’s no surprise to see Woolwich, the mortgage arm of Barclays Bank, promoting a new ten-year fixed-rate deal.

It’s hoping nervous borrowers will flock to fix their rate at 5.59 per cent for the next decade.

Andy Gray, Woolwich’s head of mortgages, says: “With many borrowers coming off cheap fixed-rate deals this autumn, and many people in the market worried about volatility in interest rates, this product offers long-term security.”

But this type of security comes at a cost.

Although, in the current market, 5.59 per cent may appear attractive – especially when the Bank of England’s own base lending rate stands at 5.75 per cent – that could well change in a year or two.

Most experts agree that before too long interest rates will fall, and someone tied in for ten years to a rate that’s no longer competitive will be badly out of pocket.

Sign up for a product like this and there’s no way out though – unless you want to pay a six per cent early repayment penalty.

For someone borrowing £150,000, that would be £9,000 down the drain…

And for most people, that’s far too much to pay – even for long-term security.

September is one of the busiest months of the year for remortgaging.

Almost 90,000 homeowners will go in search of a better deal on nearly £46 billion worth of home loans, says lender Abbey.

On average, they’ll spend just under seven hours shopping around.

Nici Audhlam-Gardiner, Abbey’s head of mortgages, says: “Re-mortgaging might be a time-consuming process, but it’s worth investing the time and effort so that you don’t have to invest too much of your hard-earned cash when your current mortgage deal comes to an end.

“In particular, customers coming to the end of fixed-rate deals in the next month will find it hard to match their previous mortgage deal as rates have gone up – meaning good deals become even more important.”

That’s why, no matter how boring you might think mortgage shopping is, it’s time well spent.

The difference between a good deal and a bad one can be thousands of pounds of interest – and a lot of grief – over the years.

For many people, a major step in the remortgaging process will be deciding whether to go for another fixed-rate deal or to opt instead for a discounted variable rate or a base rate tracker.

Several experts are saying fixed rates look expensive – and that today’s decision by the Bank of England’s monetary policy committee to leave rates on hold makes it more likely the next move will be downwards.

If they’re right, a tracker could be a very wise choice indeed.

Apparently sending a child to a fee-paying secondary school could cost as much as £140,000 – not the kind of money most people have lying around.

That’s why mortgage firm Charcol.co.uk is suggesting parents who long to see their little darlings enjoy a private education, but don’t have the income to finance it, should consider remortgaging to free up the cash.

Charcol says this is a better option than using credit cards, which is certainly true – although I can’t imagine many people would qualify for a card with a credit limit high enough to allow this kind of spending.

It maintains remortgaging is also better than other kinds of loans, but I’m not so sure about this.

The interest rate might be lower, but you will be repaying the money over a far longer period, making it more expensive in the long run.

Charcol’s Katie Tucker says: “For many parents it is likely that in the last few years the value of their house will have risen, and the value of their mortgage will have gone down. This, therefore, presents an opportunity to increase their mortgage as a means of releasing the cash.”

She makes it sound so easy, but remortgaging to release cash can be a risky business.

The more you borrow against your home, the more you have to pay back – and the greater the likelihood you’ll end up in difficulties if your finances take a downturn.

If the worst comes to the worst, you could lose your home.

Is that a price worth paying for a few years of private education? I don’t think so.

Several mortgage lenders have announced they are cutting or scrapping their exit fees for new borrowers.

But this isn’t necessarily a cause for celebration.

Until recently, all lenders applied an exit fee when borrowers cleared their loan.

A decade ago, £50 was typical, but they can now be as much as £295, and this is mostly profit.

The Financial Services Authority told lenders to justify these increases, leading several – including Halifax/Bank of Scotland, Royal Bank of Scotland Group, C&G, Standard Life and Northern Rock – to ditch the fees.

Portman, West Bromwich and Coventry merely reduced theirs.

But don’t assume lenders are giving up on this chunk of profit.

Abbey, Bristol & West and Giraffe have simply renamed these fees – and others will surely follow their lead.

New titles include administration, account, core term and lending fees.

Meanwhile, other lenders are boosting their set up, arrangement or reservation fees, sometimes by several hundred pounds, to make up the lost income.

So, unless you want a nasty shock, check all the fees involved before you sign up for a new home loan.

A correspondent wants to know how to go about taking sole ownership of a property she currently owns jointly and how much it’s likely to cost to remove her co-purchaser from the mortgage and deeds.

This is something I have personal experience of and, while I don’t want to depress anyone, I have to say the process was nowhere near as simple as you might expect.

When my husband and his first wife split up, even though he handed over his share of the former marital home as part of the divorce settlement, Halifax (why do my gripes always seem to be about Halifax?) refused to take his name off the mortgage.

Unfortunately, the admin fee it required – £160 – was the least of the problems.

Halifax said that because hubby’s ex-wife didn’t earn enough, she couldn’t take over the mortgage on her own.

So her new partner tried to add his name, but for some reason that was never fully explained, Halifax wouldn’t accept this.

For several years it insisted my hubby’s name remained on the mortgage for a house he no longer owned or paid for.

This, of course, meant he and I couldn’t buy together.

We could get a mortgage only on the basis of my salary, rather than our combined earnings, so the – very modest – house we could afford had to be bought solely in my name.

We’ve sorted things out now: his wife eventually sold up, cleared the old mortgage and moved on, and we were able to get a joint mortgage, but it was a long and stressful process.

So, getting back to my correspondent, I hope you find it easier to remove your co-purchaser from your mortgage than we did.

Provided your lender is happy that you can afford the mortgage alone, the actual process should be straightforward.

Fees for altering the mortgage paperwork will depend on your lender, but about £150 is typical.

The solicitor handling the transaction will deal with the deeds and may make a small additional charge for this.

(Of course, if your lender is especially mean it may treat this transaction as a whole new mortgage application, in which case the fees could run to several hundred pounds.)

There will also be a Land Registry charge for up-dating its records to reflect the transfer of ownership and change to the mortgage.

This will depend on the value of your mortgage – for loans of up to £100,000, it’s £40 and from £100,001 to £200,000, it’s £50.

Good luck - I’ve got my fingers crossed for you!

Choose a best-buy mortgage deal without adding up the associated costs, and you could soon be regretting it.

Low-rate home loans can come with arrangement fees of well over £1000.

And that can cost you the same as choosing a fee-free mortgage with a rate that’s half a percentage point higher – more than cancelling out the benefit of the cheap rate.

Hamptons Mortgages has calculated that taking an £150,000 interest-only mortgage fixed for two years at 4.99 per cent with an arrangement fee of £1499 would add the equivalent of 0.5 per cent a year to the interest rate.

In other words, that 4.99 per cent deal would cost the same as a no-fee loan at 5.49 per cent.

That’s why it’s so important to check out all the costs when you’re deciding on a mortgage.

Britain seems to be caught up in an offset stampede.

Last year 170,000 offset mortgages, worth almost £30 billion, were taken out – an increase of nearly 50 per cent on 2005 – according to the Council of Mortgage Lenders.

I have one myself and think they’re a great idea.

You ‘offset’ your savings – and, if you choose, the money in your current account – against your mortgage debt.

This means you don’t earn any interest on your savings balance, but you don’t pay any on the equivalent amount of mortgage either, slashing the interest you clock up every month.

You can then opt to reduce your monthly repayment accordingly or, if you leave it at the pre-offset level, you can pay off your debt years early, saving thousands of pounds.

If you have a healthy savings balance, are self-employed and need somewhere to park your tax, or are a higher rate taxpayer who does poorly out of ordinary savings accounts, they can be an absolute boon.

But offsets don’t suit everyone, and it does worry me that some people may be signing up without truly understanding the pros and cons.

If you don’t fit one of the categories above, an offset can end up costing you more than a conventional loan.

And for some people, who simply want the freedom to make occasional overpayments to help pay off their loan early, a conventional loan with flexible features might be far more cost effective.

As with any financial decision, the key is to do your homework first – and that includes the maths.