By Lee Langridge on


Why is this a good time to take out a tracker mortgage?

Not so many years ago, the humble tracker mortgage was one of the most popular mortgage products on the market in the UK. In fact, according to Bank of England data, until the financial crisis of 2008-09, around seven in 10 new mortgages were variable rate deals. However, unless you were already on the housing ladder at that time, it’s possible you’ve never even heard of or been offered a tracker mortgage.

Until now.

What is a tracker mortgage?

A tracker mortgage is a type of variable-rate mortgage that ‘tracks’ a specific interest rate, such as the Bank of England Base Rate. So, if you take out a tracker mortgage deal at ‘base rate plus 1.5%’ and the Bank of England rate is set at 3% (as it is at the time of writing), your interest rate will be 4.5%. If the Bank Rate rises or falls, your mortgage interest rate – and your monthly repayments – will sync with the change.

The key benefits of a tracker mortgage are that when interest rates are low, your interest rate will be lower than many fixed-rate mortgage deals and can fall even further in some cases. You’re also likely to have a shorter tie-in period – and that’s good news if you want to switch in the not-so-distant future. Another plus is that you’re unlikely to have to pay an early repayment charge.

The downsides are that if the rate rises, your interest rate and your monthly repayments will too and, conversely, if you have a ‘collar’ and rates fall too low, you won’t get benefit from the decrease.

Why have tracker mortgages come back?

Fixed-rate mortgages have been at historically low levels for many years now and, with the certainty they have offered, tracker mortgages had become a far less popular option.

Today, in a volatile economic climate where interest rates have climbed and the future is uncertain, most borrowers’ first reaction may well be to fix their monthly repayments and lock in their affordability and financial certainty.

But that doesn’t mean a fixed-rate mortgage is the right route for everyone. Take the current fixed-rate mortgage market and, if you’re applying now, you’re going to pay considerably more than you would have before the summer of 2022. Indeed, it’s likely that many fixed-rate loans will become more expensive – especially in the short term.

The answer is to look further ahead.

If you’re approaching the end of a fixed-rate deal or are weighing up your mortgage options, consider the Bank of England’s Monetary Policy Committee’s November projections that its interest rate path would rise ‘to a peak of around 5.25% in 2023 Q3, before falling back’.

With forecasts that this falling back means a return to low rates of just over 2% by the third quarter of 2025, borrowers who take out a tracker mortgage now will be better off in the medium term. You’ll be making higher repayments until those projected interest rates fall take effect but, again, look ahead and you could be reaping the financial benefits when – and if – they do.

Remember, these are market projections and nobody can predict exactly how interest rates will perform in the coming months and years. One thing is clear, if you’re looking for a penalty-free mortgage deal that could save you money and is easy to switch, the tracker mortgage is back.

If this sounds like a mortgage move you’d like to make, there’s no substitute for sound financial advice. Call the mortgage experts at Mortgage Decisions on 03454 500200 to talk about the tracker mortgage product that’s right for you.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Lee Langridge
Lee is an experienced Mortgage and Protection Adviser with over 15 years’ experience in the financial services industry. Lee finds no better satisfaction than helping clients to achieve their dreams, no matter how difficult it may be. Lee prides himself on delivering an efficient and personal service.
Back to blog

As a first time buyer, I was in the dark on how the process worked but having the support Beccy and Mark throughout made our journey a lot easier. Both friendly, approachable and knowledgeable a broker. I would recommend.

  • 5 star review on TrustPilotJonathan P

Both Mark and Beccy have been amazing throughout a very erratic and stressful time. They have been professional and attentive, making sure to stay in touch regularly to ensure everything went smoothly. I've been so impressed with their level of detail and service. I would not hesitate to recommend them.

  • 5 star review on TrustPilotMarie B

This is my first experience with getting a mortgage, but Rob explained everything clearly, answering all my questions, and helped me get the best mortgage for me. Louis also helped by keeping me updated with the progress of the application and chasing the lender on my behalf. Overall, a positive experience.

  • 5 star review on TrustPilotMegan

Toby was absolutely a knight in shining armour. Every step of the way he explained everything, he understood my situation and it felt like he was holding my hand through some turbulent times. I can't thank him enough.

  • 5 star review on TrustPilotSarah J

Fantastic service from Mark on securing me a mortgage offer under my difficult circumstances, thanks for all the work and effort. A real asset to the business.

  • 5 star review on TrustPilotLR O