Which lenders offer tracker rate mortgages? and why would you want one?

by Aaron Strutt

Apr 15 2025

With multiple Bank of England base rate reductions expected this year, more borrowers are discussing tracker rate mortgages and whether they are a good option.

Several UK lenders offer tracker rate mortgages, which are variable-rate mortgages that typically follow the Bank of England's base rate plus a margin of around 0.2% for borrowers with large deposits.

Tracker mortgages are popular with borrowers who want flexibility and are not interested in being tied into a fixed rate. Here's an overview of some prominent lenders and the reasons why you might consider a tracker mortgage:

Lenders offering tracker mortgages

1. Barclays for Intermediaries
   Offers tracker mortgages with flexible terms. Notably, they provide a "Switch and Fix" feature, allowing you to move to a fixed-rate deal without incurring early repayment charges. Barclays most competitively priced trackers are available for mortgages up to £2 million. 
2. HSBC for Intermediaries
   Provides term tracker mortgages that follow the Bank of England base rate for two years. They allow unlimited overpayments provided the balance is not repaid without early repayment charges. HSBC also has a high value mortgage tracker range.
3. Halifax for Intermediaries
   Offers tracker mortgages with no early repayment charges. They permit unlimited overpayments and the ability to switch rates at any time without fees. Offering competitively priced rates.
4. NatWest for Intermediaries
   Provides tracker mortgages that typically follow the Bank of England base rate for two years. They allow overpayments of up to 20% annually. There is an early repayment charge of 0.5% of the loan amount in year one and 0.25 in year two. 
5. Santander for Intermediaries 
   It offers tracker mortgages similar to other lenders, which track the Bank of England base rate for a set period. There are no percentage-based early repayment charges on Santander's trackers.

Why consider a tracker mortgage?

Tracker mortgages can be advantageous in certain financial situations:

• Benefit from falling interest rates: If the Bank of England lowers its base rate, your mortgage payments could decrease accordingly. 
• Flexibility: Many tracker mortgages offer the ability to make overpayments or repay the mortgage early without incurring fees, providing greater financial flexibility.
• Transparency: Since the rate tracks the Bank of England base rate, changes to your interest rate are more predictable and not subject to lender discretion.
• Term trackers: There are very few high street lenders offering term tracker mortgages any more. Most of the tracker mortgages are two-year trackers.

Considerations before choosing a tracker mortgage

While tracker mortgages offer certain benefits, they also come with potential risks:

• Interest rate increases: If the Bank of England raises its base rate, your mortgage payments will increase, which could impact your budget.
• Fixed rates are cheaper: Many fixed rates are more competitively priced than tracker rates.
• Lack of Rate Caps: Very few tracker mortgages have an upper limit on how high your interest rate can go, potentially exposing you to significant rate increases.

Is a tracker mortgage right for you?

A tracker mortgage might be suitable if you anticipate that interest rates will remain stable or decrease, and you desire the flexibility to make overpayments or repay your mortgage without early repayment charges. However, a fixed-rate mortgage may be more appropriate if you prefer the certainty of fixed monthly payments and want to avoid the risk of rising interest rates. We are currently in a rate-dropping environment, but things can change quickly. 

Given the complexities and potential risks associated with tracker mortgages, it's advisable to consult with a mortgage advisor or broker to assess your individual circumstances and determine the most suitable mortgage product for your needs. If you choose a tracker, try to get one with a switch-to-fix the facility in case rates rise and you want to take a fixed deal.

Aaron Strutt, product director at Trinity Financial, says: "It is a pretty good time to be taking a mortgage at the moment, given so many of the lenders are repricing and offering cheaper deals

"Most borrowers take trackers for the flexibility, many of them do not have early repayment charges, which is ideal if you are unsure about your immediate personal or financial situation. Many of them also have switch to fix options when they can take a fixed rate with their existing lenders without being penalised."

Call Trinity Financial on 020 7016 0790 to secure a 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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