A capped rate mortgage is very similar to a fixed rate mortgage, in that there is a maximum interest rate set for a given period of time, and the rate you pay is guaranteed not to go above that rate for the agreed period.
However, with a capped rate mortgage, should the Bank Rate fall during that period the rate you pay for your mortgage will 'track' the interest rate downwards, reducing your mortgage repayments.
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Capped rate mortgages protect you from rises in interest rates, while allowing you to benefit from any falls in rates. So they offer a win-win situation.
Like a fixed rate, a capped rate mortgage will come with a fee.
The main drawback is that capped rates are few and far between; not many lenders offer them, and when they do they are not available for long.
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