Last reviewed: October 2026 · By the MortgageCompass Editorial Team · How we research
A fixed-rate mortgage locks your rate, usually for two or five years, so your payment cannot change. A tracker follows the Bank of England’s Bank Rate plus a set margin, so your payment moves every time Bank Rate does. In mid-October 2026, with Bank Rate at 3.75%, the best two-year trackers on comparison tables started at around 4.0% to 4.2%, while the best two-year fixes were around 4.9% to 5.3%. That gap makes this choice unusually interesting right now. Instead of a list of pros and cons, follow the path below to the ending that fits you, then test your view on rates in the simulator.
The difference in one table
| Fixed rate | Tracker | |
|---|---|---|
| Your rate | Set for the whole deal | Bank Rate plus a margin, e.g. 3.75% + 0.45% = 4.20% |
| Monthly payment | Never changes during the deal | Rises or falls after each Bank Rate change |
| Early repayment charges | Usually yes, often 1% to 5% | Often none, but check |
| Best for | Tight budgets and peace of mind | Flexibility, and borrowers who expect rates to fall |
| Main risk | Rates fall and you are stuck paying more | Rates rise and your payment jumps |
Choose your path
Answer each question honestly and tap your answer. Each ending explains why it fits, and what to watch out for.
Test your hunch: the Bank Rate simulator
Whatever ending you reached, try a few scenarios. Notice how far Bank Rate has to rise before the fixed rate wins: that point is the real question behind this decision.
Bank Rate simulator: fixed vs tracker over two years
Pick a scenario or set Bank Rate yourself for each quarter with the + and − buttons. The chart shows your monthly payment on each deal.
Repayment mortgage. The tracker payment is recalculated each quarter at Bank Rate plus the margin; real lenders usually change it the month after a Bank Rate decision. Defaults reflect typical best-buy two-year deals in mid-October 2026 and Bank Rate of 3.75%. Product fees and any tracker floor are not included. Not financial advice.
With the default figures, the tracker costs less unless Bank Rate averages about 4.75% or more over the two years, roughly four quarter-point rises from today. The Bank of England’s Monetary Policy Committee held Bank Rate at 3.75% on September 17, 2026, by a vote of six to three. Its next decision is due on November 5.
What a rate change means in pounds
On a £250,000 repayment mortgage over 25 years, a tracker at 4.20% costs about £1,347 a month, against about £1,491 on a 5.20% fix: a saving of roughly £143 a month at today’s Bank Rate. Each quarter-point rise in Bank Rate adds about £35 a month to the tracker payment, so it would take four rises before the tracker costs more each month than the fix.
Quick questions
Can I switch from a tracker to a fixed rate later?
Yes, if your tracker has no early repayment charges or your lender allows a switch to one of its fixed rates. You would get the fixed rates on offer at that time, which may be higher if markets already expect Bank Rate to rise.
What is a tracker floor or collar?
A floor is a minimum rate written into the deal. If Bank Rate falls a long way, your rate stops falling at the floor. Check for one before assuming a tracker gains fully from cuts.
Why fixed rates are higher than trackers right now
Lenders price fixed rates mainly from swap rates, which reflect where financial markets expect interest rates to be over the coming years. When fixes cost more than trackers, as they do now, the market is pricing in some risk that rates rise, and lenders charge for taking that risk off you. If expectations change, fixed rates can move within days, even when Bank Rate itself has not changed.
Other variable options
- Lifetime tracker: tracks Bank Rate for the whole mortgage term, often with no early repayment charges.
- Discounted variable: a discount off the lender’s own standard variable rate, which the lender can change at any time, so it is less predictable than a tracker.
- Standard variable rate (SVR): where you land when a deal ends. It is usually the most expensive option; see remortgaging explained to avoid it.
Sources
This guide is for informational purposes only and is not financial advice. Your home may be repossessed if you do not keep up repayments on your mortgage. Rates shown are examples and change daily. Speak to a qualified mortgage adviser before choosing a deal.