Last updated: September 2026. This guide covers UK mortgages. It is educational content, not financial advice.
When you take out or renew a mortgage in the UK, one of the biggest decisions is whether to fix your rate or choose a tracker. A fixed rate gives you certainty. A tracker follows the Bank of England base rate, so your payments can go down, or up.
In 2026 this choice feels harder than usual. The Bank of England held the base rate at 3.75% in September, but three of the nine committee members voted to raise it, and lenders have been pushing fixed rates higher. In this guide we explain how each option works, run the numbers on real scenarios and help you decide which is best for you. We also cover the less common options, such as capped trackers and offset mortgages, that can give you some of the benefits of both.
The Short Answer
- Choose a fixed rate if you want predictable payments, have a tight budget or would struggle if your payments rose.
- Choose a tracker if you can absorb higher payments, want flexibility to leave without big penalties or believe rates are more likely to fall than rise.
Neither option is always cheaper. The right choice depends on your finances, your plans and how you feel about risk.
What Is a Fixed Rate Mortgage?
With a fixed rate mortgage, your interest rate stays the same for an agreed period, usually two, three, five or ten years. Your monthly payment does not change during that time, regardless of what happens to the base rate or the wider market.
When the fixed period ends, your mortgage normally moves to the lender’s standard variable rate (SVR) unless you arrange a new deal. According to Moneyfacts, the average SVR was 7.13% in mid September 2026, so most borrowers remortgage or switch products before their fix ends.
What Is a Tracker Mortgage?
A tracker mortgage follows the Bank of England base rate plus a fixed margin. For example, a tracker at “base rate plus 1%” would currently charge 4.75%, because the base rate is 3.75%. If the base rate rises by 0.25 percentage points, your rate rises to 5.00%. If it falls by 0.25 points, your rate drops to 4.50%.
Trackers come in several forms:
- Short term trackers, usually lasting two or five years before moving to the SVR.
- Lifetime trackers, which follow the base rate for the whole mortgage term.
- Trackers with no early repayment charges, which let you switch to a fixed rate at any time.
- Capped trackers, which cannot rise above a set level.
- Trackers with a collar, which cannot fall below a set level.
Tracker margins vary widely between lenders and depend on your loan to value, so always compare real offers.
Fixed vs Tracker at a Glance
| Feature | Fixed rate | Tracker |
|---|---|---|
| Monthly payment | Stays the same during the deal | Moves with the base rate |
| If the base rate rises | You are protected | Your payment rises |
| If the base rate falls | You keep paying the same | Your payment falls |
| Early repayment charges | Common, often 1% to 5% of the balance | Often lower, and some trackers have none |
| Budgeting | Easy | Needs a buffer |
| Best for | Certainty and tight budgets | Flexibility and those who can absorb rises |
Today’s Rates
Here is where rates stood in mid September 2026:
| Rate | Figure |
|---|---|
| Bank of England base rate | 3.75% (held on 17 September 2026) |
| Average 2 year fixed | 5.73% (Moneyfacts, 15 September 2026) |
| Average 5 year fixed | 5.78% (Moneyfacts, 15 September 2026) |
| Average SVR | 7.13% (Moneyfacts, 15 September 2026) |
Fixed rates have risen by almost 0.9 percentage points since March 2026, driven by higher swap rates and concern about inflation linked to rising energy prices.
Running the Numbers: A Two Year Comparison
Let’s compare a £250,000 repayment mortgage over 25 years on two options:
- Option A: a two year fixed rate at 5.73%, the current market average.
- Option B: a two year tracker at base rate plus 1%, which starts at 4.75%.
The fixed rate costs £1,570 a month for the full two years, a total of about £37,700.
The tracker starts at £1,425 a month. What it costs over two years depends on the base rate. In these examples, the base rate changes after six months and then stays at the new level:
| Base rate scenario | Tracker payment after change | Total paid over 2 years | Compared with the fix |
|---|---|---|---|
| Falls by 0.5 points | £1,355 | about £32,950 | about £4,700 less |
| Stays at 3.75% | £1,425 | about £34,200 | about £3,500 less |
| Rises by 0.5 points | £1,497 | about £35,500 | about £2,200 less |
| Rises by 1.5 points | £1,646 | about £38,200 | about £500 more |
Illustrative figures only. Real tracker margins, fees and rate changes will vary.
What this example shows
- The tracker wins in most scenarios because it starts from a lower rate. In this example, the base rate would need to rise by well over a full percentage point, quite quickly, before the fixed rate came out ahead.
- The risk is in the monthly payment. In the steepest scenario, the tracker payment jumps by more than £200 a month. For a stretched household, that can matter more than the total cost.
- The gap between rates is key. The bigger the difference between the tracker rate and the fixed rate, the more room the tracker has before it becomes more expensive.
Remember that this comparison uses an example tracker margin. In practice, trackers may be priced closer to fixed rates, which reduces their advantage. Always compare real quotes.
How the Bank of England Sets the Base Rate
The base rate is set by the Bank of England’s Monetary Policy Committee (MPC), which has nine members and meets eight times a year. Its main job is to keep consumer price inflation close to the government’s 2% target.
When inflation is too high, the committee may raise the base rate to cool spending and borrowing. When inflation is low or the economy is weak, it may cut rates to support growth. In September 2026, the committee kept the rate at 3.75% by a vote of six to three, with the three dissenters favouring an increase. The next decision is due on 5 November 2026.
For tracker borrowers, every MPC meeting is a potential change to their monthly payment. For fixed rate borrowers, MPC decisions matter mainly when it is time to choose a new deal.
Pros and Cons of a Fixed Rate
Pros
- Certainty. Your payment is the same every month during the deal.
- Protection from rate rises, which matters when inflation risks are high.
- Easier budgeting, especially for first time buyers and families.
Cons
- You miss out if rates fall.
- Early repayment charges can be expensive if you need to move or remortgage early.
- Current fixed rates are higher than some tracker deals.
Pros and Cons of a Tracker
Pros
- Often a lower starting rate than comparable fixes.
- You benefit immediately if the base rate falls.
- Flexibility. Many trackers have low or no early repayment charges.
Cons
- Payments can rise, sometimes quickly.
- Harder to budget, especially if your income is fixed.
- Rising rate risk when inflation is above target and policymakers are divided.
Which Is Best for You? Key Questions
Could you afford a higher payment?
Work out your payment if the base rate rose by 1 or 2 percentage points. If that would put you under real pressure, a fixed rate is likely the safer option.
How long will you stay in the property?
If you might move or sell within a couple of years, a tracker with no early repayment charges can offer valuable flexibility. If you plan to stay put, a longer fix can lock in certainty.
How much of a buffer do you have?
Savings can absorb short term payment rises. If you have little or no emergency fund, the stability of a fixed rate is worth more.
What is your view of the risks?
With inflation at 3.1% in August 2026, above the Bank of England’s 2% target, and three committee members voting for a rise, the risk of higher rates is real. At the same time, forecasts change quickly, and rates could fall if energy prices ease.
Two year or five year fix?
At the moment, two and five year fixes are priced almost identically. A five year fix gives longer protection, while a two year fix lets you reassess sooner. Remember that when a fix ends, you will need to arrange a new deal. Our guide to remortgaging explains how to do this without drifting onto the SVR.
Who Each Option Suits
A fixed rate often suits:
- First time buyers with little room in their budget.
- Families who need predictable monthly costs.
- Borrowers who plan to stay in their home for the length of the deal.
- Anyone who would lose sleep over rising payments.
A tracker often suits:
- Borrowers with savings or spare income to absorb rate rises.
- People who may move, sell or repay a large lump sum soon.
- Those who want the option to switch to a fix later without penalties.
- Borrowers who expect rates to fall and are comfortable with the risk of being wrong.
Other Options Worth Considering
- Tracker with no early repayment charges. Some borrowers take one of these and switch to a fixed rate if rates start rising, getting the best of both worlds at the cost of watching the market closely.
- Split mortgages. A few lenders let you split your loan between a fixed and a tracker portion.
- Offset mortgages. These link your savings to your mortgage, reducing the interest you pay. They are available on both fixed and variable terms.
- Discount variable mortgages. These offer a discount on the lender’s SVR. Unlike trackers, the SVR can change at the lender’s discretion, not just when the base rate moves.
Common Mistakes to Avoid
- Choosing purely on the starting rate. Think about what happens if rates rise.
- Ignoring early repayment charges. They can wipe out savings if you move or remortgage early.
- Assuming rates will fall. Forecasts are often wrong, and the current outlook is uncertain.
- Letting a deal expire. Falling onto the SVR can add hundreds of pounds a month.
- Forgetting fees. A cheap rate with a big fee can cost more overall.
Frequently Asked Questions
Is a tracker mortgage a good idea in 2026?
It can be, if you can afford higher payments and value flexibility. However, with some Bank of England policymakers voting for a rise, trackers carry more risk than usual.
Can I switch from a tracker to a fixed rate?
Often, yes. If your tracker has no early repayment charges, you can usually switch to a fixed deal at any time. Check your terms.
What happens when my fixed rate ends?
Your mortgage normally moves to the lender’s SVR. To avoid this, arrange a new deal, either with your current lender or a new one, up to six months in advance.
Do trackers have a minimum rate?
Some do. A tracker with a “collar” cannot fall below a set rate, even if the base rate drops further. Check the product terms before you apply.
Are trackers cheaper than fixed rates?
They often start lower, but whether they end up cheaper depends on what the base rate does during your deal.
Can I overpay on a fixed rate mortgage?
Usually, yes, within limits. Many fixed deals allow overpayments of up to 10% of the balance each year without an early repayment charge. Trackers often allow unlimited overpayments. Check your lender’s rules before paying extra.
What is the difference between a tracker and an SVR?
A tracker follows the Bank of England base rate by a set margin. An SVR is set by the lender and can change at any time, even if the base rate does not.
The Bottom Line
A fixed rate mortgage offers certainty and protection from rising rates, while a tracker offers a potentially lower starting rate and more flexibility, with the risk of higher payments. In our example, a tracker would stay cheaper than an average fix unless the base rate rose by more than about 1.25 points within the first few months, but its payments could rise sharply.
With inflation above target and the Bank of England divided, many borrowers will value the security of a fix. If you can handle higher payments and want flexibility, a tracker may suit you. Compare real offers and consider speaking to an FCA authorised mortgage broker before deciding.
Disclaimer: This article is for general educational purposes only and does not constitute financial advice. Rates are based on Bank of England and Moneyfacts data from September 2026 and are not offers of credit. Example tracker margins are illustrative. Your home may be repossessed if you do not keep up repayments on your mortgage.