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A tracker mortgage is a variable-rate mortgage with an interest rate that is a set amount above the Bank of England base rate. When the base rate moves, your rate moves by the same amount, usually within a month.
Trackers can be more simple to understand than other variable rates because of this. Because they are a variable rate, they often begin cheaper than a fixed rate but your monthly payments could change at any time.
This guide explains how a tracker mortgage works, current average tracker rates and how they compare to fixed and other variable deals, and how to decide if they suit you.
What is a tracker mortgage?
A tracker mortgage (sometimes called a base rate tracker or tracker rate mortgage) is a type of variable mortgage where the interest rate is directly linked to an external rate rather than set by the lender. The key difference from other variable mortgages is control. With a tracker, the lender cannot change your rate on a whim: it moves only when the base rate moves, and only by the same amount.
In the UK, almost all trackers follow the Bank of England base rate, which is typically set eight times a year by the Monetary Policy Committee (MPC). A small number of lenders link products to SONIA (the Sterling Overnight Index Average), but this is uncommon for residential mortgages.
Most major lenders, including NatWest, Halifax, Nationwide, Barclays, HSBC and Santander, offer tracker mortgages, alongside many building societies and specialist lenders. Margins and collars vary widely, which is why comparing the whole market matters.
Key factors:
Rates go up and down with the base rate, so payments can rise as well as fall
Most trackers last two, three or five years, whereas lifetime trackers run for the whole mortgage term
Many trackers have low or no early repayment charges, making them easier to leave than a fixed deal
Check for a "collar" (a minimum rate) in the small print, as this can reduce the benefit of using a tracker
Connect with a tracker mortgage expert
How does a tracker mortgage work?
Your tracker rate is made up of two parts:
- The base rate, which changes when the MPC decides
- The margin, a fixed percentage the lender adds on top, which stays the same for the length of the deal
Your rate = Bank of England base rate + a fixed margin which remains the same for the length of the deal (for example, 3.75% current base rate + 0.75% lender fixed margin, = 4.50%)
If the MPC raises the base rate by 0.25% to 4%, your rate becomes 4.75%. If it cuts to 3.50%, you pay 4.25%.
Your lender will usually apply the new rate from the start of the following month, or within 30 days, and write to you with your new monthly payment.
What a base rate change does to your payments
This example uses a £200,000 repayment mortgage over 25 years with a 0.75% margin. Figures are illustrative.
Base rate | Your tracker rate | Monthly payment | Change vs today |
3.50% | 4.25% | £1,083 | –£28 |
3.75% (current*) | 4.50% | £1,112 | N/A |
4.00% | 4.75% | £1,140 | +£29 |
4.25% | 5.00% | £1,169 | +£58 |
4.75% | 5.50% | £1,228 | +£117 |
*At the time of writing, please check the current base rate on the MPC website as this is subject to regular change
Collars and caps
Collars (or floors) are additional terms often found on tracker deals, whearas caps (or ceilings) are less commonly seen.
Collar: This is a minimum rate your mortgage won't drop below. Many trackers have a collar, so check the product's terms. This can make the tracker less desirable, as your rate can never fall lower than the collar or floor even if the base rate falls further
Cap: a maximum rate, which limits how high payments can go. Capped trackers are rare and usually cost more due to their in-built guarantee
Types of tracker mortgage
2-year tracker: the most common length term. Good if you want flexibility and expect to review your mortgage soon
3- and 5-year trackers: longer terms are sometimes charged at a slightly higher margin. Check whether ERCs apply for the full period
Lifetime tracker mortgage: follows the base rate for the full mortgage term, so you never revert to the SVR. Margins are usually higher than on short-term trackers, and some carry ERCs for the first few years
ERC-free tracker: no early repayment charge, so you can overpay, switch or leave at any time. Many trackers are ERC-free, but usually they come at a slightly higher rate
Buy-to-let tracker mortgage: available to landlords, typically with higher margins and rental stress tests
Offset tracker: links your savings to the mortgage so you pay interest only on the difference
Interest-only tracker: your payment covers interest only, so base rate changes hit the repayment proportionally harder
Tracker mortgage rates today
The Bank of England base rate was held at 3.75% for the sixth meeting in a row on 17 September 2026. The average two-year variable rate is around 4.55%*, compared with 5.96%* for the average two-year fix.
The lowest tracker mortgage rates usually go to borrowers with a larger deposit (40% or more), a clean credit file and a straightforward income. Rates change daily, so treat any figure as a guide and speak to an adviser for live, whole-of-market tracker deals.
*Correct at the time of writing, please check with our brokers for current rates.
Is a tracker mortgage a good idea in 2026? Our Expert weighs in:
It depends on where you think rates are heading and how much risk you can carry. Trackers are priced fairly similarly to fixed-rate deals at the moment, and base rate rises are expected in the coming months, which could push them higher still.
The benefit of a tracker in this type of rate environment is that most are ERC-free, so you can benefit from the slightly lower rates that may be available now, and move to a fixed deal penalty-free, if the base rate climbs as expected.
It’s best to take advice before you proceed, as a tracker could cost more than today's best fix, especially if the base rate rises."
Neil Mulhearn Tracker mortgage calculator
Use our calculator below to see how your repayments might look with a current tracker mortgage. We've used the current average rate quoted above (4.55%) as the default setting, but you can change this as required, depending on the current average at the time of your calculation:
Pros and cons of a tracker mortgage
Pros | Cons |
Often a lower starting rate than a comparable fix | Payments rise if the base rate rises |
Rate cuts are passed on in full and quickly | Harder to budget with certainty |
Transparent: the lender can't raise the margin | A collar may stop you benefiting from big base rate cuts |
Many deals have low or no early repayment charges | Margins on low-deposit and specialist trackers can be high |
Easy to switch to a fix later if rates start climbing |
Tracker vs fixed-rate and other variable mortgages
A tracker is a type of variable mortgage, but not all variable mortgages are trackers. Other variable rate types are:
With both of these, your lender sets the rate and can change it even if the base rate doesn't move. A tracker only moves when the base rate does.
A fixed-rate mortgage has its interest rate set in stone for the full duration of the deal term, no matter what happens to the base rate.
The below table compares every mortgage rate type at a glimpse:
Tracker | Fixed rate | Standard variable rate (SVR) | Discounted variable | |
What sets the rate | Base rate + fixed margin | Locked for the deal term | Lender's choice | A discount off the lender's SVR |
Can payments change? | Yes, with the base rate | No, during the deal | Yes, at any time | Yes, whenever the SVR moves |
Can the lender change the rate independently? | No | No | Yes | Yes |
Typical early repayment charges | Low or none on many deals | Usually 1%–5% | None | Often charged |
Best for | Borrowers who can absorb rises and want flexibility | Tight budgets and those who value certainty | A short stopgap only | Rarely the best value today |
Early repayment charges
Early repayment charges (ERCs) are fees lenders charge if you repay your mortgage in full, or more than allowed - typically more than 10% of your outstanding loan, during the deal period. Many tracker products don’t have ERCs, but some charge around 1%–3% of the balance, so always be sure to check your mortgage illustration (the ESIS) before you apply.
What happens when a tracker deal ends?
When a tracker ends, you'll usually move to your lender's SVR, which is typically considerably more expensive. It’s best to start looking at a new deal about six months before your current tracker ends.
How to get the best tracker mortgage deal
- Check your budget: Work out your payment at today's rate and at 2% higher
- Compare the margin: Not just the headline rate. The margin is what you actually lock in on a tracker deal
- Read the small print: Look for collars, ERCs and the reversion rate
- Add up the fees: A lower rate with a £1,500 arrangement fee can cost more than a slightly higher rate with no fee
- Get whole-of-market advice: A broker can compare trackers across lenders and spot deals you might miss
Speak to a tracker mortgage expert
Choosing your mortgage type is an important decision, and understanding every implication of your chosen rate type can save you from hefty financial mistakes. Our expert tracker deal advisers will compare tracker rates from across the whole market, and explain the collars and ERC terms in plain English.
At Echo Finance, we've helped countless people find the right tracker mortgage for their needs, and our whole of market access means we can weigh up all of your options quickly and effectively.
Ready to take advantage of a free, no-obligation chat with an expert broker? Speak to us about tracker mortgage options today
FAQs
The introductory period on a tracker mortgage is typically two, three or five years. However, there are Lifetime Tracker mortgages available, which track the Bank of England base rate for the entire term of the mortgage. These are less common and usually have higher interest rates than other tracker mortgages.
Find your local adviser
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