More borrowers consider 3.99% tracker mortgages despite potential £369 cost rise

by Aaron Strutt

Nov 03 2026

Trinity Financial arranges tracker rate mortgages for homebuyers and homeowners looking to remortgage, including large mortgage loans. With selected two-year trackers starting at 3.99%, these deals offer lower initial rates than many fixed mortgages. However, repayments will increase if the Bank of England raises its base rate.

More borrowers are considering tracker mortgages as they look for ways to reduce their initial monthly payments. But with the Bank of England’s next interest rate decision due on Thursday 5 November, understanding the potential savings and risks is essential.

Mortgage borrowers could see their housing costs rise by up to £369 a year if the Bank of England increases base rate by 25bps, according to UK Finance. The trade body said the widely-expected quarter-point increase in base rate would push up average monthly payments on tracker mortgages by £30.72, equivalent to an extra £368.64 a year, according to analysis of mortgage market data.

Why are more borrowers considering tracker mortgages?

Moneyfactscompare research found that 24% of remortgage borrowers researching deals on its website considered variable or tracker mortgages in October, compared with 14% in February. Across all borrower groups, interest increased from 11% to 17%. These figures measure borrowers researching products, rather than mortgages taken out.

The attraction is straightforward: some tracker mortgages have substantially lower starting rates than fixed deals. This can make them worth considering for borrowers with enough flexibility in their budgets to accommodate higher payments.

Which lenders offer competitive tracker mortgage rates?

Selected deals highlighted by Trinity Financial include:

Source Trinity Financial. Availability depends on eligibility, loan size and lender criteria. Tracker rates are variable.

Halifax has reduced selected two-year tracker rates by up to 0.11 percentage points. Santander’s large-loan tracker reductions are 0.24 percentage points, with its new pricing taking effect on 5 November 2026. Santander’s announcement confirms that its wider repricing includes both increases and reductions.

What happens if the Bank of England raises interest rates?

A base rate tracker typically charges the Bank of England base rate plus a set margin. When the base rate changes, the mortgage rate moves accordingly, subject to the product’s terms.

The base rate is currently 3.75%, with the next decision scheduled for Thursday 5 November. A rise is possible, but the outcome remains uncertain ahead of the announcement.

For a tracker starting at 3.99%, a quarter-point base rate increase would normally take the mortgage rate to 4.24%. A further quarter-point increase would take it to 4.49%.

The effect on monthly repayments depends on the outstanding mortgage balance, remaining term and whether the borrowing is interest-only or repayment. For example, on a £500,000 interest-only mortgage, a 0.25 percentage point increase adds approximately £104 a month to the interest bill. This is an illustration, rather than a repayment mortgage calculation.

Could a tracker still be cheaper than a fixed mortgage?

Yes. A tracker starting at 3.99% could remain below an available fixed rate even after a base rate increase.

For illustration, a quarter-point rise would take that tracker to 4.24%, still below a hypothetical 4.99% fix. However, further increases could narrow or remove the advantage. The total cost also depends on fees, the timing of rate changes and how long the mortgage is held.

It is important borrowers compare more than the initial headline rate. Early repayment charges, overpayment allowances and any costs of switching to a fixed deal later also matter.

Aaron Strutt, product director at Trinity Financial, says: “Tracker mortgages are worth considering because their starting rates can be significantly lower than fixed deals. Many also come without early repayment charges, giving borrowers the flexibility to make larger overpayments, repay their mortgage or switch to a fixed rate without an early repayment charge.

“However, the terms vary between products, and trackers will become more expensive if the base rate rises. Borrowers need to be comfortable with changing monthly payments and have enough room in their budgets to absorb increases.”

Representative example: A capital and interest mortgage of £400,000 payable over 30 years, initially on a variable rate basis at 3.99% for two years and then on the lender's 5.74% standard variable rate for the remaining 28 years. The 3.99% rate would require 24 monthly repayments of £1,912.12 followed by 336 payments of £2,314.85 The total amount repayable would be £823,911.48. This amount is illustrative and may vary, made up of the loan amount, plus interest (£417,154.85) and £999 (product fee), £80 (final repayment charge), £25 (completion fee). The overall cost for comparison is 5.6% APRC representative.

Speak to Trinity Financial about tracker mortgages

Trinity Financial can compare tracker and fixed rate mortgages, check eligibility for Premier and large-loan products, and explain how different interest rate scenarios would affect your payments.

Call Trinity Financial on 020 7016 0790 to secure a tracker mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

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