Tracker Mortgage

A tracker mortgage has an interest rate that follows the Bank of England base rate by a fixed margin. For example, a tracker set at base rate plus 0.75% would give you a rate of 5.25% when the base rate is 4.5%. If the base rate drops to 4%, your rate automatically falls to 4.75%. If it rises, your rate rises by the same amount.

How the margin works

The margin above the base rate is set when you take out the mortgage and does not change during the tracker period. A typical margin ranges from 0.5% to 1.5% above base rate, depending on the lender, your LTV, and market conditions at the time. The lower the margin, the better the deal — but lower margins may come with higher arrangement fees.

Some tracker products run for a set term (such as 2 years), after which you move to the lender's SVR. Others are lifetime trackers that follow the base rate for the entire mortgage term. Lifetime trackers are less common but offer the transparency of always knowing your rate relative to the base rate.

Pros and cons vs fixed rates

The main advantage of a tracker is transparency and potential savings. When the base rate falls, you benefit immediately — unlike a fixed rate, where you are locked in regardless. Trackers also often have lower or no early repayment charges, giving you more flexibility to switch or overpay.

The downside is uncertainty. If the base rate rises, your payments increase and your monthly budget needs to absorb the change. For borrowers who prioritise certainty and easy budgeting, a fixed rate is usually the safer choice. Trackers tend to suit borrowers who are comfortable with some payment variation and believe rates are likely to fall or stay stable.

Last updated: April 2026