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Guide to tracker mortgages

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This type of product follows the Bank of England Base Rate or the lender's Standard Variable Rate (SVR), plus or minus a certain percentage.



For example, if Bank Base Rate is 0.25% and you are on a two-year tracker mortgage of BBR +2%, the rate you pay will be 2.25%. However, if the Base Rate drops to 0.10%, your rate will also fall to 2.10%.


If your mortgage tracks your lender’s SVR it may not necessarily change in line with the Base Rate, however a Base Rate tracker is guaranteed to.


It is also possible to get mortgages that track other rates, such as LIBOR (London Interbank Offered Rate; the rate at which banks lend to each other), but these products are nowhere near as common.


Discount tracker mortgages


To confuse matters, you can also get discount tracker mortgages. Read about discount tracker mortgages in our discount mortgages section.


Lifetime tracker mortgages


Some mortgage lenders offer lifetime tracker mortgages, which will track the Bank Rate for the entire life of your mortgage by a guaranteed maximum percentage. So they may promise never to charge you more than 1% above Bank Rate, for example.


Again, lifetime tracker mortgages tend to come with relatively small fees, and with no ERCs attached.


Pros and cons of tracker mortgages


Tracker mortgages are straightforward and transparent, and some people like them because they the mortgage lender cannot influence the rate once its margin is set. The rate you pay fluctuates directly in line with the Bank Rate set by the Bank of England, rather than being attached to the lender’s own Standard Variable Rate, which it can alter whenever it chooses for commercial purposes.


Tracker mortgages can be simple products for lenders to design, so they tend to come with lower fees than fixed, capped or discounted rates.


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