MORTGAGE advisers say borrower interest in tracker mortgages is increasing as expectations of a December base rate reduction and more cuts in 2026 grow — although they warn that trackers are not for everyone as the market can move in two ways.
HSBC is one of several UK lending giants predicting a drop in the base rate this month and it believes a low of 3% could be possible by the end 2026.
If the base rate is cut aggressively, a tracker could be a good option, as it allows borrowers to benefit from immediate moves in the base rate, unlike fixed rates where the borrower is stuck on the same repayment amount until the end of their deal — normally between two and five years.
As the name suggests, a tracker mortgage tracks the base rate set by the Bank of England.
So, for example, if you were on a tracker mortgage set to track 1% above the base rate, and the base rate was reduced to 3.5%, your mortgage rate would be 4.5%.
But equally, if the base rate were to rise, so would the repayments of people on a tracker mortgage.
Tracker mortgage more appealing
Jack Tutton, director at SJ Mortgages said the gamble of a tracker product was becoming more appealing to mortgage holders given predictions of a cut to the base rate later this month and further reductions in 2026.
He added: “Another big draw with trackers is the fact that in a lot of instances there currently isn’t a large difference to the payable rate when comparing it to fixed rate alternatives.”
However, he warned: “Whilst forecasters believe that more cuts to the base rate are in the offing, it would not take much for the tide to turn whether due to events here in the UK or around the world.
“It is for this reason that a tracker is always a gamble as you have no certainty in your mortgage payments. It’s important to understand whether the tracker product you are looking at comes with any penalties should you want to change it in the future if financial markets move against you.”
The risks were also noted by Michelle Lawson, Director at Fareham-based Lawson Financial: “Trackers have their place but many borrowers still prefer the certainty and stability of fixed rates. Some people also don’t take the appropriate advice and tie in to a fixed rate and fall foul of paying the penalties, which eradicates the efficiency of the tracker.
“The potential base rate cut may make trackers more favourable for some but unless the Bank of England really gets involved and reduces rates quicker, the fixed rate markets are still more keenly priced.”
Understand the risks
Craig Fish, director at Lodestone Mortgages said that at a time when it looks like the Bank of England base rate will drop consistently, a tracker could be a very good product choice.
“Of course, there are important caveats such as people being made aware that rates can also increase. However, with careful planning and advice, a tracker product at the current time could be a very wise choice as long as it’s being compared to the best available fixed rates and the risk is understood.”
Patricia McGirr, founder at Repossession Rescue Network reminded borrowers that while a tracker mortgage can feel like freedom when rates fall, it is still a gamble on the Bank of England’s mood.
“Borrowers with stable incomes and spare capacity can ride the bumps and may well benefit if Bank Rate heads towards the predicted 3% by the end of 2026. For households juggling unpredictable earnings, the volatility can be brutal. Most people are tired of surprises and want certainty baked into their monthly outgoings, which is why fixes still dominate real demand.
“Trackers might win on paper next year but only if your finances can take the punch. The real risk is choosing hope over affordability.”
Strategic product choice
David Stirling, independent financial adviser at Mint Wealth said borrowers who opt for a tracker do need to be confident in being able to absorb payment fluctuations and ensure they have enough of a financial buffer to handle potential ups and downs.
He said: “The appeal is that some trackers come without early-repayment charges, allowing you to treat the product as a strategic, temporary option with the ability to reassess. This allows a potential remortgage in 2026 if rates fall or more competitive fixed deals emerge.
“However, for those with dependents, on tighter budget constraints or a lower tolerance for uncertainty, I’d be more inclined to choose a short- to medium-term fix, such as a two- or five-year product, for the added stability and peace of mind.”
But Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer said people need to be wary: “With significant economic data pending in 2026, it is prudent to defer recommending any variable interest rate products for now at least.”
