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Tracker mortgages

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What's a tracker mortgage?

They’re a type of variable rate mortgage usually set at a certain percentage above the Bank of England (BoE) base rate. Although buy-to-let and commercial trackers may follow a different financial indicator, such as SONIA (sterling overnight index average).

As with all variable mortgages, the interest rate can rise or fall during your deal period. Trackers are often cheaper during the initial period of a fixed-rate mortgage.

That said, it’s easier to predict tracker rate changes than changes in other variable rate mortgages, as they only change when the base rate - or other financial indicator - does, rather than at the lender’s discretion.

How are tracker mortgages different from other mortgages?

Mortgage type How the rate is set Key differences from a tracker 
Fixed-rate mortgage
Stays the same for the whole deal period, agreed upfront with the lender
  Your rate can't change, even if the base rate does. You pay for that certainty with a higher starting rate than most trackers offer.
Standard variable rate (SVR)
Set entirely at the lender's discretion, it's their own default rate
  The lender decides when it moves, not an external index. It may follow the base rate loosely, but there's no formula tying the two together.
Discount rate mortgage
A fixed discount off the lender's SVR for a set period
  Moves with the lender's SVR rather than the base rate directly, so it's one step removed from the external indicator a tracker follows.

How do tracker mortgages work?

Tracker mortgages are set at a percentage - decided by the lender - above the BoE base rate. This means, when the base rate changes, your repayments therefore go up or down in line with those changes.

For example:

  • Base rate 3.75%* - your lender sets the rate at 2% above the base rate - you pay 5.75%
  • Base rate changes to 4% - you now pay 6%
  • Base rate changes to 3.25% - you now pay 5.25%

*For demonstration purposes only but correct at the time of writing

Like all mortgages, the interest rate you’re offered for your tracker mortgage depends on the size of your deposit and your personal circumstances.

How often do tracker mortgage rates change?

The BoE Monetary Policy Committee (MPC) meets 8 times a year to set the base rate, but can hold additional meetings if needed.

This means your interest rate, and therefore your repayments, could change 8 times a year or more. Staying up to date with UK financial news can help you plan ahead, usually the base rate rises when inflation is high.

Right now, the base rate is 3.75%, after being cut gradually from its 5.25% peak in August 2023 down to 3.75% by December 2025. It's been held at that level at the last three meetings - 19 March, 30 April and 18 June 2026 - though not unanimously. Two committee members have voted for a hike rather than a hold at each of the last two meetings, worried that Middle East-driven energy prices could push inflation up further. The next decision lands on 30 July 2026.

Here's a history of the last 12 months of base rate decisions:

Date changed Rate
17 Sep 2025
Held at 4%
18 Dec 2025
Cut to 3.75%
19 Mar 2026
Held at 3.75%
 30 Apr 2026 Held at 3.75%
18 Jun 2026
Held at 3.75%

What our expert says

"Right now, tracker mortgages are a bet on which way the Bank of England blinks first. Two committee members have been voting for a hike, not a cut, so anyone assuming rates only go down from here could be in for a surprise. If you couldn't handle a jump of a percentage point or two, a tracker isn't the deal for you."

Ashlyn Trojnacki - Mortgage expert
Mortgage Expert Confused.com logo

What does an interest-rate collar and cap mean?

Interest-rate collar:

Also known as an interest rate floor, it's the rate in which the interest on your mortgage can't fall below - even if the base rate does.

For example, if your lender has set a collar rate at 1.5% and the base rate falls to 1%, the interest you pay on your mortgage will still be 1.5%.

Not all tracker mortgages have a collar rate, so check with your lender first.

Interest-rate cap:

Also known as a ceiling, a cap is rare to find on a tracker, but can be invaluable. It’s the exact opposite of a floor (or collar). Your interest rate can never rise above the cap, even if the financial indicator does.

So, if you have a deal set at 2% above the base rate, but capped at 5%, even if the base rate rose above 5%, you wouldn’t pay more than that.

What happens if I want to end a tracker mortgage early?

If you’re within a set deal period, most lenders charge early repayment charges (ERCs) to leave before the end date. Although this doesn’t usually apply to lifetime trackers.

How much ERCs you'll be charged depend on how long is left on your deal. Expect to pay a lot more if you have 9 years left on a deal than if you only have 1.

Either way, it can cost thousands to leave a deal early, and sometimes this outweighs the benefits of remortgaging to a cheaper rate.

A mortgage broker, like Mojo Mortgages, can help you understand your options and which one is best for your needs.

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What are the pros and cons of a tracker mortgage?

Tick

Advantages of tracker mortgages:

  • They often have cheaper interest rates at the beginning of the deal compared to fixed rate deals
  • There's more certainty than other variable rates due to the rate following an external indicator
  • If the financial indicator falls, you’ll benefit from lower repayments
  • Some lenders may allow unlimited overpayments - especially if it’s a lifetime deal
  • Some lenders might allow you to switch to a fixed-rate mortgage for free if the base rate rises a lot
  • If you can find a deal with a cap, you’ll benefit from knowing your interest won’t rise beyond a certain level
Cross

Disadvantages of tracker mortgages:

  • The rate could change several times a year, meaning your repayments could change dramatically and become unaffordable
  • You have to be prepared in case your rate increases, so they're harder to budget for than fixed-rate deals
  • You may have to pay ERCs to leave a deal before it ends
  • If the deal has a floor, your interest rate can't fall below a certain level, so you may not benefit when the base rate falls below a certain level

Need more help?

How long do tracker mortgages last?

You can typically take a tracker mortgage deal to suit your needs. 2, 3 or 5 years are the most common term lengths, but it’s possible to get 10 year terms and even lifetime tracker mortgages.

Once your deal ends, you’ll fall onto the lender’s default interest rate, the SVR. This is usually higher than fixed-rate and other variable rate deals, so you may want to look at remortgaging to avoid the SVR.

Are you tied into a tracker mortgage?

Most tracker deals have a set length, meaning there are likely to be early repayment charges if you leave before the deal term ends.

Some lenders may let you switch to one of their fixed-rate products without paying fees if your tracker rate suddenly increased by a lot. This is not common though, most people will end up paying ERCs.

Can I move my tracker mortgage if I move house?

Some trackers are portable - meaning you can take them with you when you move. This is laid out in your terms and conditions, so if it’s important to you, be sure to ask before you commit.

Keep in mind that porting your mortgage to a new property is not always the cheapest option and you may get a more competitive mortgage from another lender - especially if you’re looking to increase your borrowing.

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Tips & guides on tracker mortgages

APRC explained

When looking at mortgages, you’re likely to come across your fair share of jargon and acronyms. Another one to add into the mix is APRC.

The Bank of England base rate explained

The Bank of England base rate can affect how much interest you pay on your mortgage. Here’s how it works.

Overpaying your mortgage?

Mortgage overpayments are when you pay more than your normal monthly mortgage payment. This lets that you pay your mortgage off faster and you could pay less interest overall.

Loan to value explained

What is loan-to-value (LTV) and what does it mean for buying a house?

See all mortgage guides

Page last reviewed: 2 July 2026

Reviewed by: Ashlyn Trojnacki

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