Find your best local estate agent Start here
With predictions of more interest rates cuts on the horizon, you may be considering a tracker mortgage instead of locking into a fixed rate mortgage. We explain how tracker mortgages work, the pros and cons to consider & how to get the best tracker mortgage deals.
A tracker mortgage is a type of variable rate mortgage that “tracks” a base rate, usually the Bank of England’s base rate. So if interest rates increase or decrease, the rate you’ll pay on your mortgage will go up or down by the same amount.
This can make tracker mortgages an attractive option to some when interest rates are forecast to fall.
When you take out a tracker mortgage, your deal will track a certain amount above the base rate. For example:
Tracker mortgages, and other types of variable rate mortgages, work differently to a fixed rate mortgage, where you’ll pay the same rate on your mortgage for the duration of your term, usually 2, 3 or 5 years.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
There are currently around 591,000 households on tracker mortgages. By comparison, there are around 7.1 million households on fixed rate mortgages, according to UK Finance.
The length of time your tracker mortgage deal lasts for will depend on the deal you took out.
For example, these are usually 2, 3 or 5 years. At the end of your tracker mortgage you’ll usually be rolled onto your lender’s standard variable rate (SVR) unless you remortgage onto a new deal.
You can also get lifetime tracker mortgages. These track the base rate for the whole mortgage term and won’t revert to the lender’s SVR.
Tracker mortgages are a type of variable rate mortgage. Here’s how they compare to discounted mortgages and standard variable rate mortgages (both also variable rate mortgages) and fixed rate mortgages.
| Type of mortgage | How it works |
|---|---|
| Tracker mortgages | The rate you’ll pay will go up and down in line with the base rate. So if the Bank of England cuts interest rates, your mortgage payments will go down. But if it hikes interest rates, your mortgage payments will go up. |
| Discounted variable rate mortgages | Discounted variable rate mortgages track under the lender’s standard variable rate. So your rate may go up or down, depending on any changes the lender makes to its standard variable rate. |
| Standard variable rate | Your lender sets the amount you pay. If the base rate changes the lender can decide whether to pass on any or all of the increase/ decrease. These mortgages can be extremely expensive. |
| Fixed rate mortgage | You’ll pay a fixed rate during your initial term, usually 2-5 years. So you won’t pay more on your monthly mortgage payments if interest rates increase, but you won’t pay less if they fall either. |
This depends on the tracker mortgage deal you choose. Some will charge you an ‘early repayment charge’ if you want to repay the mortgage or switch to a different deal during the initial term. Read our guide Early repayment charges and how to avoid them.
But not all tracker mortgages come with early repayment charges, so it’s important to consider this when you’re taking out your mortgage.
Considering a tracker mortgage? Here are the pros and cons you need to weigh up when deciding what’s the best mortgage for you.
If the Bank of England reduces interest rates, the rate you’ll pay on your mortgage each month will go down too.
Some tracker mortgages come with no early repayment charges which means you can switch to a better rate fee-free if you find one.
Most tracker mortgages are linked to the Bank of England base rate so the amount you’ll pay on your mortgage will go up or down in line with that. By comparison, with a discounted variable rate mortgage, the rate you’ll pay will depend on the standard variable rate your lender sets.
Some tracker mortgages have a cap that limits the rate of interest you could be charged. Although you may pay a higher mortgage rate on these deals.
While the interest rates forecast for 2025 is for the base rate to go down in future months, there’s no guarantee that will happen. And if interest rates increase in the future, so will your mortgage payments.
The best mortgage rates on tracker mortgages are currently higher than for fixed rate mortgages. So many people take out trackers hoping to pay less in the future under the assumption that rates will go down. Click here for some worked examples.
If your tracker has a collar, which means there’s a limit on how low the rate you’ll pay can go, you won’t feel the benefit of interest rates cuts if they hit a certain level.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
In May 2025, the best tracker mortgage rates are:
However, the best mortgage rates can change quickly and what’s best for you will depend on your circumstances so it’s advisable to get advice from a fee-free mortgage broker.
In May 2025, the best current tracker mortgage rates are higher than the best fixed mortgage rates. This means you’ll pay more initially than you would on a fixed deal in the hope that you’ll end up paying less overall if interest rates fall in the future.
This table illustrates how much these mortgages will cost you each month in the initial term if you take out a £200,000 mortgage over 30 years.
| Mortgage type | Mortgage deal & rate | Monthly mortgage payment |
|---|---|---|
| Best 5 year variable rate mortgage | Barclays’ Base + 0.6%. Initial rate 4.85% Max LTV 60%, scheme fees £999. | £1,055 |
| Best 5 year fixed rate mortgage | NatWest at 3.88%. Max LTV 60%, scheme fees £1,495, purchases only. | £941 |
However, as the amount you’ll pay is linked to the base rate, here’s how much you’ll pay on this mortgage if interest rates change from the current rate of 4.25%.
| Bank of England Base Rate | Rate you’ll pay (Base + 0.6%) | Monthly mortgage payment |
| 4% | 4.6% | £1,025 |
| 3.75% | 4.35% | £996 |
| 3.5% | 4.1% | £966 |
| 3.25% | 3.85% | £938 |
However, while interest rates are predicted to fall in 2025, if they increase, so will your mortgage payments.
When it comes to your mortgage you need to consider what’s best for your individual circumstances. So speak to a fee-free broker so they can explain your options and find the best mortgage deal for you.
Use this mortgage cost calculator to get an idea of what your monthly mortgage costs are likely to be. You can also use it to see how your mortgage costs will change if interests increase or decrease.
Tracker mortgages are widely available at major mortgage lenders including:
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
The easiest way to compare current tracker mortgage rates is to speak to an expert mortgage broker. The best mortgage rates can change quickly so by speaking to an expert with up-to-date knowledge of the market you’ll get the best deal for you. Or you can compare the rates in your own time using this comparison table. Just toggle on “variable rate” mortgages and results will show you tracker mortgages.
Here’s the step by step process of how to get a tracker mortgage.
Start by finding out what your mortgage options are. Speaking to a fee-free mortgage broker is the quickest and easiest way to do this.
Your next step is to get a Mortgage in Principle (sometimes called an agreement or decision in principle). This is a statement from a lender on how much they would lend you ‘in principle’ based on information you have provided about your income and outgoings. Arrange a Mortgage Agreement in Principle today with the fee-free service provided by L&C mortgage brokers
Once you’ve chosen your mortgage deal, it’s time to start the formal mortgage application process. Your mortgage broker can take this forward for you.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Here at the HomeOwners Alliance, we have compiled the best mortgage lenders, based on how competitive their mortgage rates have been in recent months, as well as the size of the lender based on figures from UK Finance, and popularity with our readers. Find more in our guide to the best mortgage lenders.
However, our reviews are our opinion and do not constitute advice, recommendation or suitability for your financial circumstances. To get tailored advice, speak to an expert mortgage broker.
Your tracker mortgage rate will change if the Bank of England decides to increase or cut interest rates. These decisions are made by the bank’s Monetary Policy Committee at set dates throughout the year. If the Bank decides to hold the base rate, your mortgage payments will stay the same.
Yes, first time buyers can take out trackers as long as they meet the lender’s lending criteria. However, make sure you would be able to afford the repayments if your mortgage payments increase. Find out more in our guide to First Time Buyer Mortgages
If you can afford to pay off a tracker mortgage early you may be able to cut the amount of interest you pay by a huge amount. But it’s important to check whether your tracker deal comes with an early repayment charge if you pay it off early or make overpayments above a certain amount. Find more information in our guide Should I pay off my mortgage?
Some tracker mortgages allow you to switch to a different mortgage without needing to pay fees like an early repayment charge. However, with some mortgage deals you will face fees if you want to switch to a new mortgage before your current deal ends. So check the terms of your mortgage deal or speak to your mortgage broker.
Tracker mortgages typically track above the Bank of England base rate which means if interest rates increase or fall, you’ll automatically pay more or less on your mortgage. But a discounted variable is linked to the lender’s Standard Variable Rate. If the lender decides to increase or decrease its SVR, you’ll pay more or less on your mortgage.
Whether or not you’ll be able to overpay on your tracker mortgage will depend on your deal. Most mortgage deals let you overpay by 10% each year without needing to pay an early repayment charge, while some let you overpay by more. However, some lenders offer tracker deals that have no early repayment charges so you can overpay as much as you like, penalty-free. So check your paperwork.
Most tracker mortgages are linked to the Bank of England base rate. However, this is not always the case. For example, NatWest says its tracker mortgages follow the ‘National Westminster Bank Plc Base Rate which is influenced by the Bank of England base rate’. This base rate is currently the same level as the Bank of England’s base rate.
A tracker mortgage rate is a variable interest rate that usually changes in line with the Bank of England’s base rate. As a result, your monthly mortgage payments can go up or down as the base rate changes.
The standard variable rate (SVR) is the interest rate that you will be charged once the initial deal period of your fixed, tracker or discount mortgage ends unless you remortgage onto a new deal. With an SVR mortgage, the amount that you pay can change at any time. Find out more in our guide Should you ditch your Standard Variable Rate mortgage?
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of Seopa Ltd, for home insurance, authorised and regulated by the Financial Conduct Authority (FCA FRN: 313860).
HomeOwners Alliance Ltd is an Introducer Appointed Representative (IAR) of LifeSearch Limited, an Appointed Representative of LifeSearch Partners Ltd, authorised and regulated by the Financial Conduct Authority. (FRN: 656479).
Independent Financial Adviser service is provided by Unbiased, who match you to a fully regulated, independent financial adviser, with no charge to you for the referral.
Bridging Loan and specialist lending service provided by Chartwell Funding Limited, registered office 5 Badminton Court, Station Road, Yate, Bristol, BS37 5HZ, authorised and regulated by the Financial Conduct Authority (FRN: 458223). Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.
