Fixed and tracker mortgages: which should you choose?
A fixed-rate mortgage gives you certainty over your interest rate for a set period. A tracker follows a specified reference rate, commonly the Bank of England’s Bank Rate plus a lender margin, so your payments can rise or fall.
The right choice depends on what your budget can absorb, how much certainty you need and the terms of the deals available to you. When comparing fixed and tracker mortgages, look beyond the starting rate to fees, flexibility and the possibility of higher payments.
What’s the difference between a fixed and tracker mortgage?
With a fixed mortgage, your interest rate stays the same during the agreed fixed period. Your monthly repayment normally stays consistent too, provided you don’t change other mortgage details.
That period is different from your mortgage term. A two-year fix might be part of a mortgage repaid over 25 years.
A tracker has a variable interest rate linked to a specified reference rate. For example, Bank Rate plus 1.00 percentage point would give a mortgage rate of 4.75% when Bank Rate is 3.75%.
The FCA explains the distinction between fixed and tracker rates. A lender’s standard variable rate, or SVR, is different: the lender sets it, and it doesn’t necessarily move directly with Bank Rate.
| Feature | Fixed mortgage | Tracker mortgage |
|---|---|---|
| Interest rate | Fixed for the agreed period | Follows the specified reference rate, subject to the contract |
| Monthly payment | Normally stable during the fix | Can rise or fall |
| Falling reference rates | No automatic reduction during the fix | May reduce your rate, subject to any minimum rate |
| Leaving or overpaying | Charges and allowances depend on the deal | Some deals offer more flexibility, but charges can apply |
| End of the deal | Moves to the contractual follow-on rate unless you arrange another deal | May have an end date or track for the mortgage term |
A two-year tracker isn’t fixed for two years. The rate can change throughout that period.
Why are borrowers comparing fixed and tracker mortgages now?
On 5 October 2026, Moneyfacts reported an average five-year fixed rate of 6.00%, with the two-year average at 5.98%. Meanwhile, Bank Rate remained at 3.75% when checked on 12 October.
New fixed deals reflect wholesale funding and hedging costs, expectations about future rates and lenders’ pricing decisions. They can therefore become more expensive without Bank Rate changing.
These dated averages aren’t the cheapest available rates or a quote for your circumstances. Loan-to-value, fees and eligibility affect the products you can access.
The difference between fixed and tracker mortgages makes comparing worthwhile. It doesn’t prove that a tracker will be cheaper over the period you keep it.
How could a tracker rate change your monthly payments?
Suppose you have a £200,000 capital-and-interest repayment mortgage with 25 years remaining.
For illustration, a reference rate of 3.75% plus a margin of 1.00 percentage point gives a starting mortgage rate of 4.75%.
| Scenario | Mortgage rate | Approximate monthly payment |
|---|---|---|
| Reference rate falls by 0.50 percentage points | 4.25% | £1,083 |
| Starting assumption | 4.75% | £1,140 |
| Reference rate rises by 0.50 percentage points | 5.25% | £1,199 |
| Reference rate rises by 1.00 percentage point | 5.75% | £1,258 |
These are hypothetical rates, not product quotes. Each calculation uses the same £200,000 starting balance and 25-year term, with no fees or overpayments. Figures are rounded to the nearest pound.
The table shows separate scenarios, not a predicted sequence of payments. A change later in the mortgage would use the balance and remaining term at that time.
Notice that a one-percentage-point rate rise doesn’t mean a 1% payment increase. Here, moving from 4.75% to 5.75% adds approximately £118 a month.
Our mortgage rate change calculator lets you explore different rates using your own figures. Enter the resulting mortgage rate, including the tracker margin, rather than Bank Rate alone.
The calculator assumes repayment borrowing and excludes product fees and early repayment charges. Try higher rates as well as lower ones.
Which option could suit your budget and plans?
Start with the payment you can comfortably afford, rather than a prediction about interest rates.
Consider:
- Your need for certainty: would knowing the payment for an agreed period make budgeting easier?
- Room for increases: could you absorb a higher payment alongside bills, debts and other commitments?
- Income changes: would reduced earnings leave you struggling?
- Future plans: might you move, sell, overpay or repay a lump sum?
- The actual products: how do their rates, fees and restrictions compare?
When we compare a fixed rate with a tracker, we’d check payments at the starting rate and under higher-rate scenarios, alongside the flexibility you may need.
Payment certainty can have value even if a tracker mortgage later proves cheaper. Equally, a fixed rate doesn’t protect against lost income or every affordability problem.
Being self-employed or a first-time buyer doesn’t automatically decide which mortgage fits. Your budget, circumstances and available products matter.
How do fees and early repayment charges affect the choice?
A lower headline rate doesn’t necessarily mean lower borrowing costs.
Compare product fees, relevant broker fees, legal and valuation costs, incentives and charges for leaving your existing mortgage. Adding a fee to the loan also means paying interest on it unless it’s repaid.
For a simplified example, paying £40 less each month for 24 months saves £960 in payments. That wouldn’t cover an extra £999 upfront fee on payments alone.
This isn’t a complete cost calculation. Monthly repayments include capital, so a fuller comparison should also consider the balance remaining at the end of the chosen period.
An early repayment charge may apply when you switch, repay the mortgage or exceed an overpayment allowance. The Financial Ombudsman explains why the mortgage agreement’s terms matter.
Some tracker mortgages have no early repayment charge; others have restrictions. Also check for a minimum rate, sometimes called a floor or collar, which can limit how far the mortgage rate falls.
Our mortgage comparison calculator can illustrate payments and product fees with rates held constant. It doesn’t model changing tracker rates, every switching cost or differences in the remaining balance, so it isn’t a definitive verdict on the cheapest mortgage.
Can you take a tracker now and switch to a fix later?
Potentially, but flexibility doesn’t remove the risk of waiting.
Some tracker mortgages allow you to leave without an early repayment charge. We’d check the product documents before assuming that applies.
Taking a tracker doesn’t reserve a fixed rate for later. New fixed offers could become more expensive before Bank Rate changes, and a product available today might be withdrawn.
Switching could also involve another product fee or eligibility checks. The process may differ between taking a new product with your existing lender and applying elsewhere.
A tracker mortgage may suit someone who values flexibility and can manage variable payments. But “I’ll fix if rates rise” isn’t a guarantee that a suitable, affordable fixed deal will be available then.
What should you compare before your current deal ends?
Gather your outstanding balance, remaining term, deal-end date, exit charges and estimated property value. Then compare the proposed products’ rates, fees and conditions.
Reviewing what happens when your fixed-rate mortgage ends can help you understand the contractual follow-on rate and your next steps.
Taking another product with your current lender is normally a product transfer. Remortgaging means moving your mortgage to another lender.
Either route may offer suitable options. Don’t assume that changing lender, or staying put, will automatically cost less.
How can a mortgage adviser help you compare?
An adviser can assess suitable products against your budget and plans, including fees, tracker terms, exit charges and payments under different rate scenarios.
We’d also check whether your circumstances have changed and consider your existing lender’s options where appropriate. A calculator helps explain the numbers, but it doesn’t assess product eligibility or suitability.
Our remortgage advice can help you compare suitable options against your current mortgage and plans.
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Frequently asked questions
Is a tracker mortgage the same as a variable mortgage?
A tracker is one type of variable-rate mortgage. It follows a specified reference rate. Other variable products include a lender’s SVR and mortgages offering a discount from that SVR, which work differently.
Are tracker mortgages always cheaper than fixed mortgages?
No. Starting rates, fees and product terms vary, and a tracker’s future cost depends on the reference rate. A lower payment today doesn’t establish that it will cost less over the period you keep it.
Does every tracker mortgage follow Bank Rate?
No. Many UK trackers follow Bank Rate, but the mortgage contract specifies the reference rate. Check what it tracks, the lender margin, how long the arrangement lasts and whether any minimum rate applies.
What happens if Bank Rate doesn’t change?
A Bank Rate tracker generally stays at the contractual reference rate plus margin, subject to its terms and deal duration. New fixed mortgage offers can still be repriced because their pricing depends on more than today’s Bank Rate.
Can first-time buyers choose a tracker mortgage?
Some lenders offer tracker products to first-time buyers. Availability depends on factors including deposit, affordability and lender criteria. Being a first-time buyer doesn’t mean you must choose a fixed rate, but managing potential payment increases remains important.