Fixed vs tracker mortgage
A fixed rate buys certainty; a tracker follows the base rate and bets on cuts. In today’s market the two are priced closer than they’ve been in years — so the choice is really about risk, not price.
The verdict
There’s no universal winner — it depends on how much payment uncertainty you can stomach. Fixed wins if you value a payment that never moves and you’d lose sleep over rate rises. Tracker wins if you can absorb fluctuation, want to benefit if the base rate falls, and value the flexibility to overpay or switch without penalty. Right now the starting rates are so close that the deciding factor is your appetite for risk, not the headline number.
Fixed rate
Rate locked for a set term
- Payment never changes for the term
- Easy to budget, no rate-rise risk
- Peace of mind in volatile markets
- No benefit if the base rate falls
- Early repayment charges to exit
- Less room to overpay freely
Tracker
Base rate plus a set margin
- Payments fall if the base rate is cut
- Often no early repayment charges
- Freedom to overpay or switch
- Payments rise if the base rate climbs
- Unpredictable monthly budgeting
- Low-level anxiety at every BoE meeting
Why this choice got harder
For years the fixed-versus-tracker decision was easy: trackers were noticeably cheaper, fixed rates noticeably safer, and you picked your trade-off. That gap has largely closed. Because the base rate has been falling and lenders have already priced expected cuts into their fixed products, the spread between the two is nowhere near what it used to be. You’re no longer choosing between cheap and safe — you’re choosing between two products of similar cost but very different risk.
That’s the heart of it. A tracker follows the Bank of England base rate plus a fixed margin — say base rate plus 0.9%. When the base rate moves, your rate and your payment move with it, in either direction. A fixed rate stays put for the term, whatever the wider market does. The catch worth knowing: fixed rates aren’t actually driven by today’s base rate at all, but by swap rates — the market’s bet on where rates are heading. So when a cut is widely expected, fixed deals often get cheaper before the base rate moves an inch.
The numbers on a £250,000 mortgage
Here’s how the two compare on a 25-year, £250,000 mortgage at illustrative current rates — and what happens to the tracker if the base rate shifts. These are examples to show the mechanics, not live quotes.
| Scenario | Rate | Monthly payment |
|---|---|---|
| 5-year fixed | 4.60% | £1,404 |
| Tracker today (base + 0.9%) | 4.65% | £1,411 |
| Tracker if base falls 0.5% | 4.15% | £1,340 |
| Tracker if base rises 0.5% | 5.15% | £1,483 |
The fixed and tracker start within a few pounds of each other. The real story is the bottom two rows: the tracker could save you around £64 a month if cuts arrive, or cost you nearly £80 more if rates rise. Over a few years that swings into the thousands — which is exactly why this is a risk decision dressed up as a rate decision.
When each one wins
Fixed wins when…
- A stable payment matters more to you than a possible saving.
- Your budget is tight and a rate rise would genuinely hurt.
- You expect rates to stay flat or climb.
- You want to set the mortgage and forget it for a few years.
Tracker wins when…
- You can comfortably absorb a higher payment if rates rise.
- You believe the base rate will fall and want to benefit.
- You value flexibility — to overpay or remortgage without penalty.
- You might move or repay early and want to dodge exit charges.
One thing that catches people out: doing nothing isn’t a neutral option. When any deal ends, you roll onto the lender’s standard variable rate, which sits far above both fixed and tracker products — often north of 7%. On our £250k example that’s around £1,788 a month, hundreds more than either deal. Whatever you choose, the costly mistake is letting a deal lapse without lining up the next one.
Common questions
Is a fixed or tracker mortgage cheaper in 2026?
They’re unusually close. Because lenders have priced expected base-rate cuts into fixed products, the starting rates for fixed and tracker deals are within a small margin of each other. A tracker can become cheaper if the base rate falls, and more expensive if it rises, while a fixed rate stays the same. The cheaper option over the full term depends entirely on what rates do next.
What is a tracker mortgage?
A tracker mortgage charges the Bank of England base rate plus a fixed margin — for example, base rate plus 0.9%. When the base rate changes, your interest rate and monthly payment change by the same amount. It’s a type of variable mortgage, but unlike a standard variable rate it tracks the base rate specifically rather than the lender’s own discretion.
Can I overpay or leave a tracker without penalty?
Usually yes. Many tracker mortgages have no early repayment charges, giving you the freedom to overpay or remortgage whenever you like. Fixed-rate deals, by contrast, typically charge a penalty if you repay or switch before the term ends. This flexibility is one of the tracker’s main attractions for people who might move or overpay.
What happens to a tracker if interest rates rise?
Your rate and monthly payment rise by the same amount as the base rate increase. On a £250,000 mortgage, a 0.5% rise could add roughly £70–£80 to your monthly payment. This is the core risk of a tracker: the upside if rates fall comes paired with real exposure if they climb, which is why it suits borrowers who can absorb the swing.
Why are fixed rates sometimes lower than the base rate?
Because fixed rates are priced off swap rates — the market’s expectation of where interest rates are heading — not today’s base rate. If markets strongly expect cuts, lenders build those into fixed pricing in advance, which can leave a fixed rate below the current base rate. It reflects confidence that rates will fall, not a mistake.
Should I try to time the market?
It’s nearly impossible to do reliably. Even professional economists and the Bank of England itself revise rate forecasts regularly. Rather than betting on a prediction, the sound approach is to stress-test your budget against a rate rise: if you could comfortably afford a higher payment, a tracker’s risk is manageable; if not, the certainty of a fix is worth paying for.
Related tools & guides
How we put this together
Comparison reflects how UK fixed and tracker mortgages work: a fixed rate is locked for the term, while a tracker charges the Bank of England base rate plus a set margin. Fixed rates are priced off swap rates rather than the current base rate.
Worked figures use a 25-year, £250,000 mortgage at illustrative rates around a base rate near current levels, with payments calculated using the standard repayment formula and cross-checked. Actual rates, margins and the base rate change frequently; the standard variable rate you revert to is typically much higher than either deal.
We review this comparison when the base rate moves or typical fixed and tracker pricing shifts materially.