Is Now a Good Time to Take Out a Tracker Mortgage?

It might seem odd for borrowers to switch to a tracker mortgage right now, given the economy’s uncertainty and the Bank of England’s recent rate rises. However, doing so could result in significant savings on mortgage payments.

For many years, the certainty of a fixed-rate deal, combined with low interest rates, made it the most common type of home loan. However, this may no longer be the case, given the rise in interest rates.

So, is it a good idea to take out a tracker mortgage right now?

Possibly. It depends on your circumstances and attitude toward risk. For instance, if you’re on a tight budget, you might prefer a fixed-rate deal, even if it means paying slightly more. If you lose sleep over potential rate increases, a fixed-rate mortgage may be your best option.

But if your current deal is ending, it’s worth comparing tracker rates and fixed-rate mortgage deals.

It’s important to consider the maximum you can budget for a mortgage in anticipation of interest rates changing. Whether they rise or fall, having a maximum budget in mind will help you assess whether taking out a tracker mortgage is a good idea.

Is the rate likely to rise?

The Bank of England’s current base rate is 4% (October 2025). While further large-scale rate hikes are unlikely, incremental increases are still possible depending on future economic conditions, such as inflation, employment rates, and the economy’s overall health.

The Bank of England reviews interest rates every six weeks, which means the rate is assessed continuously to determine whether it needs to change in response to economic data.

This is important if you have a tracker mortgage because tracker rates are directly linked to the Bank of England’s base rate. If the base rate increases, your mortgage payments will increase accordingly.

For example, if the base rate increases by 0.25%, your tracker mortgage rate would also increase by 0.25%, resulting in higher monthly repayments. If the base rate falls, your repayments will decrease accordingly.

Can you get out of a tracker rate mortgage if you change your mind?

You can, but there may be an early redemption penalty to pay. However, not all tracker rate mortgages include penalties for an early exit, so you must be clear on the terms of your loan from the outset.

Sometimes, paying the penalty is worth it in the long run if the deal you’re switching to is low enough. This may well be the case as the markets settle and we get a clearer picture of how the housing market will stabilise.

Speaking to a mortgage broker is a good option before you take out a tracker mortgage. They can advise on the fine print concerning this type of mortgage, such as exit fees, and help you calculate whether it’s a better option than a fixed-rate mortgage.

Conclusion

There is no definitive answer to whether now is the right time to take out a tracker-rate mortgage. It may be the right decision for some homeowners but not for others.

Whether you’re looking to buy your first home, remortgage, or invest in a buy-to-let property, your safest option is to speak with a mortgage broker like those we work with. They will assess your current circumstances and plans to help you decide which type of mortgage is right for you.

A broker can also help you understand each loan’s different terms and conditions, ensuring you’re prepared to act when market conditions change.

However, they can only offer advice based on your circumstances at the time you speak to them. Interest rates can change, as can your circumstances, and brokers don’t have more information on the future prospects of the economy than anyone else.