Why is Nationwide putting its rates up again?

The squeeze on liquidity means that less funding is available for banks and building societies to offer good value mortgages. Lenders have responded by withdrawing from the market for new business. By increasing rates to uncompetitive levels, Nationwide is effectively turning borrowers away and is likely to continue doing so until financial markets recover.

I have a Nationwide tracker. Should I cancel it and switch elsewhere?

There is no need. The increase will only effect new customers taking out Nationwide tracker rate deals.

Existing trackers will continue to move up and down in line with the Bank of England base rate at the amount you agreed when you took out the loan.

Borrowers with these deals who still want to switch could change to a Nationwide fixed rate instead, for a £399 fee, or £199 if you are switching to a five or ten-year fix. However Nationwide's current range of fixed rates is not that competitive either. It charges 5.68 per cent for a two-year fixed rate, compared with a best-buy of 4.95 per cent from First Direct.

Switching to another lender before your existing Nationwide deal has expired could leave you liable for early repayment charges of up to 3 per cent of the outstanding balance. On a £150,000 loan, this would come to £4,500.

I am due to remortgage in a few months and want to change lender, but am worried about further rate rises. Can I lock into a deal now?

If you are due to remortgage within six months, then your broker can reserve a rate that is available now for you for six months time. However it is possible that the mortgage market may have recovered by then, so unless you are desperate to secure a rate, it may be more worthwhile to wait and see what rates are available closer to the time.

My deal has just expired. If there are no other rates worth having, should I just stick with my lender's Standard Variable Rate until the market improves?

It could be an expensive gamble, because no one knows when the market will improve. There are other, cheaper options, such as taking out a lifetime tracker that does not charge a penalty should you decide you want to redeem the loan. "There is no reason to sit on an SVR and wait" says Julia Harris, of Moneyfacts.co.uk, the price comparison website: "There are better rates on mortgages such as lifetime trackers on which you would still not be penalised if you switched."

First Direct currently offers the cheapest lifetime tracker on the market, with a current rate of 5.74 per cent and a £399 fee.

If you think interest rates are going to go down, you could pick a deal that has a "drop-lock" option. These track the base rate, but allow you to fix when you think that the rate is not likely to go down any further. RBS, Natwest, Nationwide, C&G and Scarborough Building Society offer this kind of deal.

The only people who could genuinely be stuck on an SVR are those who borrowed 100 per cent of their property value last time around and are no longer eligible for deals, Ms Harris says. These borrowers should keep a constant check on the market in case lenders start to relax rules again.