The short answer For more information, see FCA mortgage advice guidance.
- Fixed rates give certainty — your payment cannot change during the fix
- Trackers follow the Bank of England base rate — you benefit automatically if rates fall
- With rates expected to fall further, trackers are more appealing than they have been in years
- The right choice depends on your budget flexibility, timeline and risk tolerance
Fixed rate or tracker? It is the first question most borrowers face, and the right answer depends entirely on your circumstances — not a universal rule. Here is a clear comparison.
What is a fixed rate mortgage?
A fixed rate locks your interest rate for a set period — typically 2, 3 or 5 years. Your monthly payment is guaranteed to stay the same throughout the fix, regardless of what happens to the Bank of England base rate.
At the end of the fixed period, your mortgage reverts to the lender’s standard variable rate (SVR) — which is usually significantly higher. Almost all fixed-rate borrowers remortgage before this happens.
What is a tracker mortgage?
A tracker is set at a fixed margin above the Bank of England base rate. When the base rate moves, your mortgage rate moves with it — automatically and immediately. There is no need to remortgage to benefit from a rate cut.
Most tracker products track for 2 or 5 years (short-term trackers), then revert to SVR. Lifetime trackers follow the base rate for the full mortgage term and often have no early repayment charges.
Fixed rate vs tracker: direct comparison
| Fixed rate | Tracker | |
|---|---|---|
| Monthly payment | Guaranteed — never changes | Moves with the base rate |
| If rates fall | You miss out (locked in) | Payment drops automatically |
| If rates rise | Fully protected | Payment increases |
| Early repayment charges | Usually 1%–5% during fix | Often none (term trackers) |
| Overpayments | Usually 10%/year cap | Often unlimited |
| Typical initial rate | Slightly higher | Slightly lower |
| Best for | Budget certainty, expecting rates to rise | Rate flexibility, expecting rates to fall |
Two-year vs five-year fixed: which is better right now?
This is a separate but related question. With the Bank of England base rate expected to continue falling:
| 2-year fix | 5-year fix | |
|---|---|---|
| Rate | Sometimes slightly higher currently | Often slightly lower for security |
| Flexibility | Can remortgage sooner if rates fall significantly | Locked in for longer — miss out if rates drop further |
| Stability | Admin of remortgaging every 2 years | 5 years of certainty |
| ERCs | 2 years of exposure | 5 years of exposure |
Current thinking
With rates expected to fall gradually through 2026, a 2-year fix gives you the option to lock in a lower rate at remortgage. A 5-year fix offers certainty but may lock you into a higher rate longer than necessary. Individual rate differences between lenders often matter more than the 2 vs 5 year question.
When to choose fixed
- Your budget is tight — you need to know exactly what your mortgage costs
- You believe rates will rise — lock in now before increases
- You value certainty above potential savings
- You are unlikely to move during the fixed period
When to choose tracker
- You have financial headroom — can absorb a £100–200/month increase if rates move up
- You expect rates to keep falling — and want to benefit immediately
- You may sell or move in 1–2 years — no ERCs means no penalty
- You want maximum overpayment flexibility
Example scenario
You have a £350,000 mortgage. The best 2-year fix available is 4.4%. The best tracker is base rate + 0.5% (currently 4.75%). Over two years, if the base rate falls by 0.75% in year one and another 0.5% in year two, the tracker ends up costing less in total interest — and you had no ERCs. If rates stay flat or rise, the fix wins. Neither outcome is guaranteed.
Frequently asked questions
Can I switch from a tracker to a fixed rate if rates start rising?
Yes — if your tracker has no early repayment charges (most lifetime trackers do not), you can move to a fixed rate at any time. This gives you the downside protection of a fixed rate when needed, while benefiting from falls in the meantime.
What is the standard variable rate (SVR)?
The SVR is the rate your mortgage reverts to when a fixed or tracker deal ends. It is set by the lender and is typically 2–4% higher than deal rates. You should always remortgage before your deal expires to avoid it.
Should I fix for 2 or 5 years?
With the current outlook for falling rates, a 2-year fix gives more flexibility to remortgage at a lower rate in 2026–2027. A 5-year fix is better if you value certainty and want to avoid remortgaging twice. The specific rates available for each from the lender you qualify for often tip the balance.
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