Mortgage Rates: Tracker mortgages explained: what are they and should you get one?

A tracker mortgage is designed to move with interest rates linked to the Bank of England’s base rate. That can mean lower repayments when rates fall, but it also means your monthly cost can rise if rates increase.

This guide explains how tracker mortgages work in practice, what “collars” and “SVR” mean, how lifetime trackers differ, and the main factors to weigh up before choosing this type of mortgage.

• Looking at a shorter deal? Read about two-year tracker mortgages.
• Considering a longer-term option? See our lifetime tracker mortgages guide.
• Weighing up certainty and flexibility? Compare fixed and tracker mortgages.
• Interested in another variable-rate option? Compare tracker and discount mortgages.

What is a tracker mortgage?

A tracker mortgage is a type of variable-rate mortgage where the interest rate is linked to the Bank of England’s base rate.

In many cases, your mortgage rate is calculated as:

• Base rate (set by the Bank of England)
• Plus a lender’s margin (the extra amount the lender charges)

So if the base rate changes, the interest rate on your tracker mortgage can change too.

How does a tracker mortgage work?

Tracker mortgages usually don’t mirror the base rate exactly. Instead, they typically include a margin that is set in the mortgage agreement.

Many tracker mortgages start with an introductory period (often for a set number of years). During this time, the mortgage rate is usually based on the base rate plus a margin that may be lower than what you’ll pay later.

When the introductory period ends, the mortgage usually moves to a different rate structure, most commonly the lender’s standard variable rate (SVR).

If your tracker is set at base rate + 1%:

• Base rate is 5%: your rate is 6%.
• Base rate falls to 4%: your rate becomes 5%.

The exact margin and how it changes (if at all) depends on the specific tracker product.

Introductory rates and the SVR transition

SVR (standard variable rate) is the rate your lender charges once any introductory or special rate period ends.

SVR is typically higher than the introductory tracker rate, and it can change over time based on the lender’s pricing.

If you’re considering a tracker mortgage with an introductory period, it’s important to understand:

• what rate you’ll pay during the introductory period
• what rate you’ll pay after it ends
• whether the lender’s SVR is likely to be significantly higher than the tracker rate you’re used to

Your repayment amount can change at the end of the introductory period even if the base rate hasn’t moved.

What is a tracker mortgage “collar”?

Some tracker mortgages include a collar.

A collar sets a minimum level for the interest rate during the tracker period. That means:

• If the base rate falls below the collar threshold, your mortgage rate may not fall as much as it otherwise would.
• If the base rate rises, your repayments can still increase.

In other words, a collar can limit potential benefit if rates drop, while still exposing you to increases.

Lifetime tracker mortgages

Not all tracker mortgages have an introductory period.

A lifetime tracker keeps the tracker-style rate structure for the whole mortgage term. That means your interest rate can continue to move with the base rate throughout.

If you prefer budgeting certainty, a lifetime tracker can be harder to manage because repayments may fluctuate more frequently over time.

How inflation and interest rates connect

Tracker mortgages are linked to the base rate, and the base rate is influenced by inflation and wider economic conditions.

When inflation is high, interest rates often rise to help control it. If the base rate increases, tracker mortgage repayments can increase as well.

The key point for home buyers is that tracker mortgages can be sensitive to changes in the wider economy, not just your personal circumstances. Read more about how the Bank of England base rate impacts your mortgage.

Pros and cons of tracker mortgages

Potential advantages:

• Lower repayments when rates fall: If the base rate drops, your mortgage rate can drop too.
• Link to base rate can be easier to understand: You can often see how base rate changes may affect your mortgage.
• Product features may support flexibility (product-dependent): Some tracker products may have features that make switching easier than certain fixed-rate deals. This varies by lender and product.

Potential disadvantages:

• Repayments can rise: If the base rate increases, your monthly payments can increase.
• Uncertainty around future costs: Even if you’re comfortable with variable rates, the timing and size of base rate changes can be difficult to predict.
• SVR can be more expensive: After an introductory period, you may move to a rate that is higher than the tracker rate you started on.
• Collars can limit benefit: If your tracker has a collar, you may not benefit fully if rates fall.

Tracker mortgage vs fixed-rate mortgage (what’s the difference?)

A fixed-rate mortgage sets your interest rate for a defined period, so your repayments are typically more predictable.

A tracker mortgage can change as the base rate changes, so repayments are less predictable but may move in your favour if rates fall.

Choosing between them often comes down to how comfortable you are with repayment changes and how long you plan to keep the mortgage before remortgaging or moving. Read our fixed-rate mortgage guide for more on the alternative.

Can a first-time buyer get a tracker mortgage?

Yes, some lenders offer tracker mortgages to first-time buyers.

However, availability and product features depend on the lender’s criteria and the specific mortgage design (including whether there is an introductory period, any collar, and what happens after it ends).

Alternatives to a tracker mortgage

If a tracker mortgage doesn’t feel like the right balance of risk and certainty, common alternatives include:

• Fixed-rate mortgages (repayments are steadier during the fixed period)
• Standard variable rate (SVR) mortgages (variable, but not linked in the same way to the base rate)

How to compare tracker mortgages effectively

A useful comparison is to look beyond the headline rate and compare:

• the benchmark link and the margin
• any collar or other rate limitations
• fees and likely total cost
• the term of the tracker and what happens afterwards
• whether the deal includes features that affect repayment flexibility

Because tracker mortgages can change over time, comparing the terms and understanding how they would behave under different benchmark scenarios is often more helpful than focusing on a single point in time.

Tracker mortgage FAQs

Key points to consider before choosing a tracker mortgage

• Understand the full rate journey: introductory period, any collar, and what happens after.
• Model repayment scenarios: consider what happens if rates rise rather than only what happens if they fall.
• Think about your time horizon: if you may move or remortgage soon, the introductory period may matter more than the long-term rate structure.

A tracker mortgage can suit home buyers who are comfortable with variable repayments and want a mortgage rate that moves with the base rate. For others, the predictability of a fixed-rate mortgage may be a better fit.

External guidance (authoritative)

• Bank of England base rate information
• MoneyHelper: mortgages and borrowing guidance

Mortgage advice disclaimer: A mortgage is a long-term commitment and affordability depends on your personal circumstances. If you’re unsure, speak to a regulated mortgage adviser to discuss options that may be suitable for you.