Mortgages

Is a Tracker mortgage still a good idea? the MoneyMagpie guide for 2025

Vicky Parry 3rd Nov 2025 No Comments

Reading Time: 5 minutes

Tracker mortgages move in line with the Bank of England’s base rate — meaning your payments rise or fall whenever the base rate changes. After years of volatility, many homeowners are asking: are tracker mortgages still worth it in 2025?

With the base rate currently at 4.75% (as of November 2025, Bank of England

WHAT IS A TRACKER MORTGAGE?

A tracker mortgage follows the Bank of England’s base rate plus a set percentage decided by your lender — for example, base rate + 1%.

So if the base rate is 4.75%, your tracker mortgage would currently charge 5.75%. If the Bank of England lowers the base rate, your mortgage rate will fall too — but if rates go up again, your monthly repayments will rise.

Unlike discount or capped rate mortgages, tracker mortgages are not tied to your lender’s Standard Variable Rate (SVR). They follow the base rate directly.

However, many lenders now include a “collar”, meaning your rate can’t drop below a certain minimum, even if the base rate falls.

WHO ARE THEY SUITED TO?

Tracker mortgages are best for borrowers who:

Can afford higher repayments if interest rates rise; and
Believe the base rate will stay stable or fall in the near future.

They tend to suit:

Homeowners expecting rate cuts in 2026;
People with strong credit histories and good savings buffers;
Borrowers wanting to avoid long fixed-rate tie-ins.

If you prefer certainty and stability, a fixed-rate mortgage is safer — you’ll know exactly what you’ll pay every month.

Tip: You can compare today’s best tracker and fixed-rate deals using MoneyMagpie’s mortgage comparison service

THINGS TO WATCH OUT FOR

Before jumping into a tracker mortgage, there are some things to consider first.

1. The State of the Market

The Bank of England’s base rate peaked at 5.25% in 2024, before being cut to 4.75% in August 2025. Many analysts expect gradual reductions over the next 12–18 months — but nothing is guaranteed.
(Bank of England

Arrangement fees

It costs money to set-up a mortgage, and most lending institutions are only too happy to charge you for it! Whether you’re a first-time buyer or re-mortgaging, the arrangement fee can sometimes break the £1,000 barrier. An increasing number of lenders are charging arrangement fees that are a percentage of the loan amount (say 1%) rather than a fixed fee, in order to get to the top of the ‘best buy’ tables. So if you want the best rate you pay a bigger fee.

As a general rule, the bigger your mortgage, the less important the fee is – because the interest rate is much more significant. So it might be worth paying the fee in order to get the cheap rate. If you have a small mortgage though, the size of the fee is important – as the money you’ll be charged from interest will be a lot less.

Early repayment charges

A mortgage is a massive debt, and we think that the sooner you get it cleared, the better. However, as far as the bank is concerned, they want you to keep your mortgage for as long as possible, so you keep paying them interest.

To try to limit how quickly you can pay off your mortgage, some tracker mortgages will have early repayment charges. These charges vary enormously by provider. They are sometimes calculated as a percentage of what you overpay (rather than being a flat fee). This means that the faster you try to repay your mortgage (i.e. the more financially responsible you are), the more they charge!

If a tracker mortgage seems to be a good deal but has high early repayment charges, think twice before signing up. One of the key benefits of tracker mortgages is that when rates are low or falling, they give you an opportunity to overpay your mortgage payments (without having to increase your expenditure). High early repayment charges nullify one of the main advantages to having a tracker mortgage in the first place, so be sure to read the small print.

Higher lending charges

If you have little or no deposit, there may be a higher lending charge (HLC). This is to cover the cost of insurance taken out by the lender in case you default on your mortgage payments, and there is any shortfall in what you owe the lender once your house has been sold.

An HLC is levied by some lenders when people are looking to take out a loan worth more than a certain percentage of the property (anything from 75% – 90% of the property’s value). Some sneaky mortgage providers may even only offer their headline interest rate on (for example) an 85% loan, while charging you at a premium should you require a higher loan-to-value.

The HLC is usually a percentage of the mortgage amount and could add up to a few thousand pounds – so avoid paying it if you can. Look out for a lender that doesn’t slap you with this charge, because it’s not common practice anymore.

Valuation and legal fees

If you are remortgaging, you may find that some lenders will offer free valuation and free legal fees. This could save you a few hundred pounds, so it’s worth considering.

Stamp duty, searches and conveyancing

Always bear in mind that there are far more costs to buying a house than just your mortgage. Stamp duty, land registry fees, surveys, conveyancing, broker fees if you use a broker… it’s a long list, so be sure to factor them into your budget!

For those interested in The Mortgaged UK, their resources focus on the UK market and offer valuable insights into its unique lending environment. While focused internationally, their commitment to providing clear information on home finance echoes the transparency borrowers should seek from any lender.

HOW DO YOU GET A TRACKER MORTGAGE?

You can apply for a tracker mortgage directly from a lender, but using a whole-of-market mortgage broker helps ensure you don’t miss a better deal elsewhere.

MoneyMagpie works with L&C (London & Country Mortgages) — an independent, fee-free mortgage broker that searches across the market to find the right deal for your situation.

Should You Get a Tracker Mortgage in 2025?

Tracker mortgages can still be attractive in 2025 if:

You’re confident the Bank of England will cut rates further;
You have enough income flexibility to handle rate rises;
You want to avoid long-term tie-ins before potential cuts.

But for many households, fixed-rate deals remain safer — especially if you’re on a tight budget or nearing the end of a fixed term.

As of late 2025:

Average 2-year tracker = around 5.75%
Average 2-year fixed = around 4.45%
(HomeOwners Alliance

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Is a Tracker mortgage still a good idea? the MoneyMagpie guide for 2025

WHAT IS A TRACKER MORTGAGE?

WHO ARE THEY SUITED TO?