Tracker Mortgages
Follow the Bank of England base rate automatically. Benefit when rates fall, with transparent pricing and flexible terms.
Content reviewed: 13 January 2026
What is a tracker mortgage rate and how does it work?
A tracker mortgage rate automatically follows the Bank of England base rate plus a fixed margin. For example, 'base rate + 1.5%' means if base rate is 5%, you pay 6.5%. When the base rate changes, your rate changes instantly by the same amount. Trackers offer transparency and can benefit borrowers when rates fall.
What is a tracker mortgage?
A tracker mortgage follows the Bank of England base rate plus a fixed margin. When base rate changes, your rate changes automatically. This offers transparency and potential savings when rates fall. Your Home Finance helps you compare tracker deals and understand the risks involved.
What Is a Tracker Mortgage?
A tracker mortgage has an interest rate that automatically follows the Bank of England base rate. The rate is set as a fixed margin above the base rate—for example, 'base rate + 1.5%'. When the base rate changes, your mortgage rate changes by exactly the same amount.
If the base rate falls, you benefit immediately with lower monthly payments. If it rises, your payments increase accordingly. This makes trackers transparent and responsive, unlike Standard Variable Rates which lenders can change at their discretion.
Tracker mortgages can be for a fixed term (e.g., 2 or 5 years) or for the lifetime of the mortgage. Lifetime trackers typically have no Early Repayment Charges at any time, offering complete flexibility to overpay or remortgage whenever you choose.
Key Benefits of Tracker Mortgages
When the Bank of England base rate falls, your mortgage rate falls automatically by the same amount
Rate changes happen immediately, not at your lender's discretion like with SVRs
Tracker rates are typically lower than equivalent fixed rates at the outset
The rate calculation is clear—base rate plus a set margin that never changes
Tracker Mortgage Insights: Expert Tips
Understanding how tracker mortgages work and when they make sense
Tracker mortgages are priced as 'base rate + margin'. For example, if the base rate is 5% and your tracker is 'base + 1.5%', you pay 6.5%. When base rate changes to 4.75%, you automatically pay 6.25%. The margin stays fixed for the tracker period. Lower margins are better—compare trackers by their margin, not just the current total rate.
Term trackers (2-5 years) track the base rate for a set period, then typically move to the lender's SVR. They often have Early Repayment Charges during the term. Lifetime trackers follow the base rate for the entire mortgage life with no ERCs, giving maximum flexibility. Consider how long you want the tracking period and whether you value flexibility to remortgage without penalties.
Some trackers have a 'collar'—a minimum rate below which you can't benefit, even if base rate falls further. Caps set a maximum rate. No collar is better as you benefit from all rate falls. Caps provide some protection from rises. Check the small print—collars can significantly reduce the value of a tracker if you expect rates to fall substantially.
Trackers work best when you expect base rates to fall or stay low. They're ideal if you can afford potential payment increases but want to benefit from decreases. Avoid trackers if you need payment certainty or believe rates will rise significantly. They suit financially flexible borrowers who can tolerate some uncertainty for potential savings.
The Bank of England base rate has ranged from 0.1% (2020-2021) to 5.25% (2023) in recent years. Historically, it's been as high as 15% (1989) and as low as 0.1%. Trackers magnify these movements—if base rate rises 0.5%, your payment increases instantly by the same amount plus your margin. Ensure you can afford at least 2-3% higher than current rates.
Lifetime trackers with no Early Repayment Charges offer maximum flexibility. You can overpay, remortgage to a fixed rate, or pay off the mortgage any time without penalties. This flexibility is valuable if your circumstances might change. Term trackers usually have ERCs like fixed rates, reducing this advantage. Check overpayment allowances—some allow unlimited overpayments.
Frequently Asked Questions
Explore Tracker Mortgage Options
Compare tracker mortgages across the market and find the best margin for your circumstances.
Get Your Free Consultation