Is it time to take a sub-4% tracker rate mortgage?

Is it time to take out a tracker-rate mortgage?

 

The Bank of England (BoE) base rate has been held at 3.75% for the fourth month, prompting more borrowers to ask whether it is time to take a tracker-rate mortgage rather than lock into a fixed rate. The answer depends on whether borrowers want payment certainty or are comfortable taking a calculated risk that interest rates may fall over the next year or two.

Tracker mortgages have become more attractive because some of the cheapest tracker rates are currently lower than many fixed-rate mortgages. Moneyfacts says the typical two-year fix fell to 5.59%, from 5.62% last week, and the average five-year fix fell to 5.56%. The most competitively priced tracker rates are sub-4%, while the lowest fixed rates start at around 4.30%, mostly for borrowers with larger deposits.

Which lenders offer the cheapest tracker rate mortgages?

The cheapest tracker mortgage lenders change frequently. At the moment, Barclays, HSBC, Santander and Halifax are offering two-year tracker rates around 4%, which is 0.25% above the Bank of England base rate.

Halifax has the most competitively priced tracker rate at 3.96%, at 0.21% over the Bank of England base rate. It has a £1,499 arrangement fee for mortgages up to £1 million and a £3,999 arrangement fee for mortgages between £1 million and £5 million. Barclays’ lowest trackers are aimed at its Premier customers, with a 40% deposit. The lowest one is 0.24% over the base rate and has no early repayment charges. 

Other lenders often seen in the tracker mortgage market include:

Lender	Tracker rate position
Barclays	Often competitive, especially for Premier or larger-loan borrowers. Also has offset mortgage tracker rates.
Halifax	Has offered some of the cheapest tracker rates with no ERCs for quite some time
HSBC	Offers two-year tracker mortgages across selected LTV bands
Nationwide	Often has tracker options, including fee-free deals
Santander	Periodically offers competitive Bank Rate trackers
NatWest	Offers trackers at times, but ERC and fee structures need checking
Coventry Building Society	Can offer competitive variable or tracker-style options
Private banks	May offer bespoke variable or tracker pricing for large loans

 

Borrowers should not choose a tracker based on the headline rate alone. A 3.96% tracker with a £1,499 fee may not be better than a slightly higher fee-free tracker if the borrower only keeps it for a short time or they have a smaller mortgage.

Is the Bank of England going to cut or raise the base rate?

The Bank of England kept the base rate at 3.75% at its June 2026 meeting. The decision was not a straightforward “rates are definitely coming down” signal, because two Monetary Policy Committee members voted for a rise to 4%. The Bank remains concerned about inflation risks, particularly stemming from global energy prices and geopolitical uncertainty.

That said, the UK economy remains weak. In its April Monetary Policy Report, the Bank said underlying GDP was expected to grow by only 0.1% in Q2 2026, with uncertainty weighing on business confidence and investment. BoE Governor Andrew Bailey said that our economy has "softened."

This is why tracker mortgages are back in the conversation. If the economy continues to flag and inflation becomes less threatening, the Bank of England may eventually feel able to cut rates. But if inflation proves sticky, or energy prices rise again, borrowers on trackers could see payments increase.

Aaron Strutt, product director at Trinity Financial, says: “Tracker mortgages are very appealing at the moment because some are cheaper than fixed rates and many have no early repayment charges. They can work well for borrowers with savings, strong affordability and a willingness to accept moving payments. But they are not for everyone. Anyone stretching their budget should think very carefully before giving up the certainty of a fixed rate.”

Is the UK’s flagging economy going to tempt borrowers to take tracker mortgages?

Yes, some borrowers will be tempted. A slower economy usually increases the pressure on the Bank of England to cut interest rates, especially if inflation is heading in the right direction. Borrowers who believe base rate cuts are likely may prefer a tracker because their monthly payments should fall if the Bank cuts.

There is also another reason trackers are attractive: flexibility. Many tracker deals have no early repayment charges, so borrowers may use them as a holding position. They can take a cheaper tracker now, then move to a fixed rate later if fixed rates improve.

Do all lenders offer tracker rate mortgages?

No. Not all mortgage lenders offer tracker rate mortgages, and those that do may only offer them in certain situations. Some lenders offer trackers for:

Borrower type	Are tracker rates usually available?
Residential purchase	Yes, with selected lenders
Residential remortgage	Yes, with selected lenders
First-time buyers	Sometimes, depending on loan-to-value
Existing customer product transfer	Not always
Buy-to-let	Available from some lenders
Large loans	Available from some banks and private banks
High loan-to-value borrowers	Fewer options than for larger-deposit borrowers

 

The most competitive tracker rates are usually for borrowers with larger deposits or more home equity, often at 60%, 70%, or 75% loan-to-value. Borrowers with 10% or 15% deposits may still find tracker options, but the choice is narrower, and the rates may be higher.

Do all lenders offer tracker rates to existing customers on product transfers?

No. This is one of the most important points for remortgage borrowers. Many lenders offer existing customers a selection of fixed-rate product transfer deals, but they do not always include tracker rates in their switcher range. Some lenders do, but others reserve trackers for new borrowers, remortgage customers or specific product ranges.

This is why borrowers should check what their current lender will offer as a product transfer and what they could get by remortgaging to another lender.

Pros and cons of taking a tracker mortgage

Pros	Cons
Payments may fall if the Bank of England cuts the base rate	Payments rise if the base rate increases
Some tracker rates are cheaper than fixed rates	No payment certainty
Many trackers have no early repayment charges	Budgeting is harder
Useful as a short-term holding position	Fees can reduce the benefit
Can switch to a fixed rate later if pricing improves	Not all lenders offer tracker product transfers
Often cheaper than a lender’s standard variable rate	Best rates usually need larger deposits or equity

 

Who might benefit from taking a tracker mortgage?

A tracker mortgage may suit borrowers who:

• Have a comfortable monthly budget.

• Have savings in reserve.

• Believe interest rates are more likely to fall than rise.

• Want flexibility to switch later.

• Are not planning to stay on the deal for long.

• Are coming off a fixed rate and want to avoid a high standard variable rate.

• Have a larger deposit or lower loan-to-value.

Should borrowers take a tracker or fixed rate?

There is no single right answer. Fixed rates remain better for borrowers who want certainty, especially families or first-time buyers with tight budgets. Trackers can be useful for borrowers who can afford some risk and want to benefit if the Bank of England cuts rates. 

Borrowers should compare the full cost of a tracker against fixed rates, including arrangement fees, valuation fees, legal costs, incentives and early repayment charges.

Trinity Financial view

Tracker mortgages are likely to attract more attention while the UK economy remains weak and borrowers think the Bank of England may eventually cut rates. They are also appealing because some trackers are cheaper than fixed-rate mortgages and provide the flexibility to switch later.

Representative example: A capital and interest mortgage of £1,000,000 payable over two years, subject to base rate changes, initially on 3.96% variable rate until 30/06/2028, would require 25 repayments of £4,754.29 and 335 monthly repayments of £6,702.97. The total amount repayable would be £2,364,452.20 made up of the loan amount, plus interest (£1,370,367.73) and a (£1,499 product fee), £50 (final repayment charge), £25 (completion fee). The overall cost for comparison is 6.8% APRC representative.

Speak to a Trinity Financial adviser today

The mortgage market moves fast — and the right advice can make a significant difference to the rate and deal you secure. Get in touch with our team to discuss your options.

Call Trinity Financial on 020 7016 0790 to secure a fixed or tracker rate mortgage, book a consultation, or use our appointment calendar

The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.

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