How tracker mortgages are priced
A tracker doesn't have a rate of its own. It follows the Bank of England base rate plus a fixed margin — quoted as something like "base rate + 0.79%" — and the margin is the only part the lender controls. When the Monetary Policy Committee changes the base rate, your rate moves by the same amount, normally from the start of the following month.
That transparency is the product's real advantage. With a fix, you're paying whatever the lender's swap-market pricing plus profit margin works out to, and you can't see the components. With a tracker you can see exactly what you're paying over the base rate, which makes comparing two trackers genuinely straightforward: the lower margin wins, assuming the fees and terms match.
Tracker or fixed?
The real question is not which will turn out cheaper — nobody knows that — but who should carry the risk of rates moving. On a fix, the lender carries it and charges you for the privilege. On a tracker, you carry it and keep the money you'd otherwise have paid for the insurance.
So the sensible test is not a forecast, it's a stress test: if the base rate rose by two percentage points, could you comfortably afford the payment? If yes, a tracker is a legitimate choice and you'll benefit immediately from any cuts. If that increase would hurt, the certainty of a fix is worth paying for regardless of what you think rates will do.
Trackers win when
The base rate falls or holds, and you'd otherwise have paid a premium for fixed-rate certainty you didn't need.
Fixes win when
Rates rise, or when a stable payment lets you sleep and plan — a benefit that's real even if the tracker turns out cheaper.
Trackers also win when
You need flexibility. Many trackers have no early repayment charge at all, so you can switch to a fix the moment you want to without paying to leave.
Collars, floors and lifetime trackers
Check whether the product has a collar or floor — a level below which your rate stops falling even if the base rate keeps dropping. It's less common than it once was, but it does still appear, and it quietly removes part of the benefit you're taking the risk for.
Also check what happens at the end. Most trackers run for two or five years and then revert to the lender's standard variable rate, which is not a tracker and is usually much more expensive. A lifetime tracker runs for the whole mortgage term at the same margin — often at a slightly higher margin than a short-term tracker, in exchange for never having to remortgage again.
Trackers as a waiting room
A specific and increasingly common use: taking a tracker with no early repayment charge as a deliberate holding position. If you think rates are about to fall but you don't want to commit to today's fixed pricing, a penalty-free tracker lets you wait without being on the lender's standard variable rate, and switch to a fix whenever you decide the time is right.
It's not free — you're paying the tracker rate meanwhile, and if rates rise instead you'll have paid more than the fix would have cost. But as a way to stay liquid while the picture clarifies, it's a reasonable and underused option, and it's worth confirming the ERC is genuinely nil rather than merely small.
Common questions
What is a tracker mortgage?
A tracker follows an external rate — almost always the Bank of England base rate — plus a set margin. If the base rate falls, your payment falls; if it rises, your payment rises. The margin itself is fixed for the length of the deal.
How quickly does my payment change after a base rate decision?
Most lenders apply the change from the first of the following month, so there's typically a short lag between the announcement and your payment moving. The exact timing is set out in your mortgage terms.
Do tracker mortgages have early repayment charges?
Many don't, which is one of their main attractions — you can switch to a fixed deal at any time without paying to exit. Some do, particularly the ones with the sharpest margins, so it's worth confirming rather than assuming.
What is a collar on a tracker mortgage?
A collar (or floor) is a minimum rate below which your mortgage won't fall, however low the base rate goes. It caps the benefit you get from rate cuts, so check whether one applies before choosing a tracker for its downside potential.
How current are the rates on this page?
We collect product data from the lenders we track from their published information and refresh it regularly, so the tracker margins above reflect our most recent check of each lender's published products. Lenders can withdraw or reprice a deal at any time, sometimes with a few hours' notice, and a rate shown here is not an offer — availability depends on your circumstances, the property and the lender's own criteria.