Choosing between a fixed or tracker mortgage is one of the biggest financial decisions you’ll make as a homeowner. With the Bank of England base rate currently at 4% and uncertainty about future rate movements, it’s a question we hear regularly from clients across Buckinghamshire, Bedfordshire, and Hertfordshire.
The right choice depends on your personal circumstances, budget flexibility, and appetite for risk. Let’s break down everything you need to know to make an informed decision.
What's the Difference Between Fixed and Tracker Mortgages?
A fixed-rate mortgage locks your interest rate for a set period, typically two, three, five, or even ten years. Your monthly payments stay exactly the same throughout this term, regardless of what happens to interest rates in the wider economy.
A tracker mortgage, on the other hand, follows the Bank of England base rate. When the base rate moves up or down, your mortgage rate adjusts accordingly. Lenders typically add a set percentage on top of the base rate (for example, base rate plus 0.60%), which determines your actual interest rate.
The fundamental difference is certainty versus flexibility. Fixed rates give you predictable payments, while tracker rates give you the potential to benefit from falling interest rates.
The Case for Fixing Your Mortgage Rate
Fixed-rate mortgages remain the most popular choice in the UK, and for good reason. The primary advantage is budgeting certainty. You know exactly what you’ll pay each month, making it easier to plan your finances and manage household expenses.
Protection from rate rises is another major benefit. If the Bank of England increases the base rate during your fixed term, your payments won’t change. This proved invaluable for homeowners who fixed their rates before the rapid interest rate increases between 2021 and 2023.
Currently, the best five-year fixed rates are around 3.90% to 4.01%, depending on your deposit size and circumstances. These rates are actually lower than many tracker mortgages available today, which might surprise some borrowers expecting trackers to always be cheaper.
Fixed deals also give you peace of mind. There’s no anxiety about rate announcements or checking the news to see if your payments are about to increase. For families on tight budgets or those who value stability above all else, this psychological benefit shouldn’t be underestimated.
The downside? If interest rates fall significantly during your fixed term, you won’t benefit from lower payments. You’re also typically locked in with early repayment charges, which can be substantial if you need to sell or remortgage before your term ends.
The Case for Choosing a Tracker Mortgage
Tracker mortgages offer flexibility and the potential for savings when rates fall. With many economists predicting the base rate could drop to around 3.75% by the end of 2025, and potentially lower into 2026, tracker mortgages are gaining renewed interest.
The best five-year tracker rates currently sit around 4.60%, but these move directly with the base rate. If predictions prove accurate and the base rate falls by 0.25% or 0.50% over the coming year, tracker mortgage holders would see their monthly payments reduced immediately.
Many tracker mortgages also offer greater flexibility with overpayments and often come with lower early repayment charges than fixed deals. Some even allow you to switch to a fixed rate or remortgage without penalties during the tracker term, giving you options if the market changes.
The risk is obvious. If inflation remains stubborn or economic conditions change, the Bank of England might hold rates higher for longer, or even increase them. Your monthly payments could rise, potentially stretching your budget. You need financial breathing room to absorb potential payment increases.
What's Happening with Interest Rates Right Now?
Understanding the current economic picture helps inform your decision. The Bank of England cut the base rate from 5.25% to 4% through two reductions in 2024 and 2025, with the most recent cut in August 2025.
However, inflation has proven sticky. The consumer price index stood at 3.8% in both July and August 2025, well above the Bank of England’s 2% target. This has made the Monetary Policy Committee cautious about further cuts.
The next base rate decision is scheduled for 6 November 2025. Most analysts expect the Bank to hold rates at 4%, as policymakers remain wary of cutting too quickly while inflation persists above target.
Looking ahead, forecasts vary. Some economists predict the base rate could fall to around 3.5% by early 2026, while others suggest a more gradual decline to 3.75% by year-end 2025. The pace of any cuts will depend heavily on inflation data and economic growth.
When you’re considering selling your property or purchasing a new home, mortgage affordability plays a crucial role in your decisions. Understanding where rates might be heading helps you plan your move more effectively.
Which Option Suits Your Circumstances?
Your personal situation matters more than general market predictions. Here are some scenarios to consider.
Choose a fixed-rate mortgage if you:
- Need predictable monthly payments for budgeting
- Have limited financial flexibility to absorb payment increases
- Are risk-averse and value peace of mind
- Believe interest rates might rise or remain elevated
- Plan to stay in your property for the full fixed term
Consider a tracker mortgage if you:
- Have financial cushion to manage payment fluctuations
- Believe rates will fall significantly in the near term
- Want flexibility to overpay or remortgage without heavy penalties
- Are comfortable with some uncertainty in your monthly outgoings
- Can stress-test your budget against potential rate increases
Getting Expert Mortgage Advice
Mortgage decisions shouldn’t be made in isolation. Speaking with a qualified mortgage adviser ensures you understand all available options and find the right product for your specific circumstances.
At Michael Anthony Estate Agents, we work closely with trusted financial services professionals who can assess your situation and recommend suitable mortgage products. They’ll consider your income, outgoings, future plans, and risk tolerance to guide you towards the best decision.
Whether you’re a first-time buyer, moving home, or remortgaging, professional mortgage advice can save you thousands over the term of your loan. Advisers have access to deals not available directly to consumers and can navigate the application process on your behalf.
Frequently Asked Questions
What mortgage rate is better right now, fixed or tracker?
Currently, the best fixed rates (around 3.90-4.01%) are actually lower than most tracker rates (around 4.60%). However, if the base rate falls as predicted, tracker mortgages could become cheaper over time. Your choice depends on whether you prioritise immediate certainty or potential future savings.
How much could I save with a tracker mortgage if rates fall?
If you have a £200,000 mortgage and the base rate falls by 0.25%, you’d save approximately £29 per month, or £348 per year. A 0.50% reduction would save around £58 monthly. However, these savings only materialise if rates actually fall, and you’d lose money if rates rise instead.
Can I switch from a tracker to a fixed-rate mortgage?
Yes, though it depends on your lender’s terms and whether you’re within an early repayment charge period. Some tracker mortgages offer penalty-free switching, while others charge fees. Always check the terms of your specific mortgage deal before making changes.
What happens if I choose wrong and rates move against me?
If you fix and rates fall significantly, you’ll pay more than necessary but have the security of stable payments. If you track and rates rise, your payments increase but you’re not locked in long-term. Neither choice is truly “wrong” if it matches your circumstances and risk tolerance when you decide.
Should I fix it for two years or five years?
Two-year fixes offer flexibility to remortgage sooner if rates improve, but you’ll face remortgaging costs again sooner. Five-year fixes typically have slightly higher rates but provide longer-term certainty and save on remortgaging fees. With rates expected to fall gradually, many borrowers are currently favouring shorter fixes.
How Michael Anthony Estate Agents Can Help
With over 30 years of experience serving Buckinghamshire, Bedfordshire, and Hertfordshire, Michael Anthony Estate Agents understands how mortgage decisions impact your property journey. Whether you’re purchasing your first home, moving to a larger property, or remortgaging your current home, we’re here to support you.
Our team provides free, no-obligation property valuations to help you understand your position in the market. We also connect you with trusted mortgage advisers who can assess your circumstances and find the right mortgage product for your needs.
Making the right mortgage choice requires understanding both the market and your personal situation. There’s no one-size-fits-all answer, but with the right guidance and information, you can make a confident decision that suits your circumstances.
If you’re considering your mortgage options or planning a property move, get in touch with our experienced team today. We’ll provide honest, professional advice to help you navigate the property market with confidence.