Fixed or Tracker Mortgage: Costs, Risks and 2026 Timing
Choosing between a fixed rate and a tracker is one of the sharper decisions facing borrowers in 2026. Fixed rates climbed again through September, yet the Bank of England base rate is still held at 3.75% and tracker deals now sit well below the average fix. That leaves a genuine choice: pay for the certainty of a fixed rate now, or take a cheaper tracker and accept that payments rise if the base rate does. This article explains how each option works, where the risks sit and what to weigh before you decide. Mortgage One is a whole of market mortgage adviser comparing fixed and tracker deals for borrowers whose current rate is about to end.
For a free initial consultation about whether to fix or track your mortgage, call 01202 155992 or contact Mortgage One.
Why the fixed or tracker decision matters in October 2026
The decision matters now because tracker deals are far cheaper than fixes. At the end of September 2026 Moneyfacts put the average two-year fixed rate at 5.94% and the average two-year tracker at 4.45%, a gap of 1.49 percentage points and the widest since November 2022. Fixing buys certainty, a tracker buys a lower starting rate.
Fixed rates have risen because markets now expect the base rate to go up. A global bond sell-off pushed ten-year gilt yields to their highest level since 2008, which lifted the swap rates lenders use to price fixed deals and set off a run of repricing across the market.
Pricing kept moving into October. Moneyfacts put the average two-year fix at 5.96% and the average five-year fix at 5.98% on 2 October 2026, the highest two-year figure since late June 2024 and the highest five-year figure since late September 2023. For the lender moves behind those averages, our analysis of why mortgage rates are going up tracks the repricing as it happens.
Trackers have not followed because they move with the base rate itself. The Bank of England held Bank Rate at 3.75% on 17 September 2026, and its next decision is due on 5 November 2026. Our guide to upcoming Bank of England meeting dates and decisions keeps the schedule and the latest vote in one place.
How do tracker and fixed mortgages differ?
A fixed rate sets your interest rate for a set term, usually two or five years, so your payments stay the same whatever happens to the base rate. A tracker follows the Bank of England base rate plus a set margin, so your payments fall when the base rate is cut and rise when it climbs.
The core trade-off is certainty against flexibility. A fixed rate protects you from rises and makes budgeting simple, but you are locked in and usually face an early repayment charge if you leave early. A tracker can get cheaper if the base rate falls and often has lower or no early repayment charges, though your payments can rise if the Bank of England moves the other way. For a fuller explanation of how a tracker mortgage works, including lifetime and discounted variants, our tracker guide sets out the detail.
When a tracker mortgage can work in your favour
A tracker works in your favour if the base rate rises by less than markets expect. At the end of September 2026 the average two-year tracker only overtook the average two-year fix after more than 1.49 points of rises, roughly six quarter-point moves. Markets priced at least four over the next year.
The saving shows up in monthly terms. Moneyfacts calculated on 1 October 2026 that a borrower with a £250,000 mortgage over 25 years would pay around £1,600 a month on the average two-year fix, against around £1,395 on the average tracker. That is a starting saving of more than £200 a month. The same research found that 21% of remortgage borrowers looked at variable or tracker deals in September, against a usual share of 13% to 14%.
Completions tell the same story. Connells found that 12.7% of borrowers chose a tracker in August 2026, up from 5.9% a year earlier and the highest share since January 2023.
The pay-off is real if the Bank of England moves less than the market expects, but the risk runs both ways. If inflation surprises on the upside and rises arrive faster or go further, your payment climbs with each decision. A tracker can also be a useful bridge if you expect to repay a lump sum or sell, since you avoid tying yourself into a fix you would only have to break. The right answer depends on your appetite for that uncertainty and how soon you might need to move.
Why fixing still wins for many borrowers
Fixing still wins for many borrowers because certainty has real value when markets expect the base rate to rise. A fixed rate holds your payment for two or five years however many increases arrive, and many lenders let you reserve one up to six months ahead. For a stretched budget that protection often outweighs a tracker’s lower starting rate.
For most people a mortgage is the largest monthly commitment they have, and knowing exactly what it costs for the next few years is worth a great deal. Fixing removes the risk that a stubborn inflation reading, or a change of tone at the Bank of England, pushes your payments up. The choice between a two and five-year fix then comes down to how long you want that certainty and how settled your plans are. If you are still weighing whether to fix at all, our should I fix my mortgage analysis covers the two-year and five-year decision in detail. You can compare current two and five-year fixed rates as a starting point, though the rate you are offered depends on your loan-to-value, deposit and circumstances.
The jump is sharpest for borrowers coming off older fixes. Moneyfacts calculated that a borrower with a £250,000 mortgage over 25 years who fixed for five years at 2.38% in 2021 would have paid around £1,106 a month. Moving onto the average two-year fix takes that to around £1,600. If the new payment is a stretch, a lower loan-to-value band or a longer term can bring it down, though a longer term raises the total interest you pay.
To weigh a fixed rate against a tracker for your own deal and timing, call 01202 155992 or contact Mortgage One.
Can you switch from a tracker to a fixed rate later?
Yes, provided the tracker has no early repayment charge, or a small one. That lets a tracker act as a holding position: you take the lower rate now and switch to a fix if pricing improves. Many borrowers used the same approach after the September 2022 mini-budget, when fixed rates spiked.
When you compare trackers for this purpose, the early repayment charge matters more than a small difference in margin. Our tracker mortgage rates page sets each big lender's margin over Bank Rate beside its early repayment terms. A common approach is to take a tracker while the outlook is uncertain, then lock into a fixed rate if the base rate starts to settle or if you decide you want payment certainty. Check your tracker’s terms first, because a minority carry early repayment charges that would change the maths, and remember that the fixed rates available when you switch may be higher or lower than today’s. Switching is rarely instant either, so allowing time to arrange a new deal stops you paying more than you need to while the change goes through.
What the 5 November rate decision means for trackers
The Bank of England’s next rate decision is on 5 November 2026, with Bank Rate at 3.75% and markets leaning towards a quarter-point rise. For a tracker, a rise of 0.25 points adds that amount to your rate, usually within weeks, while a hold leaves payments unchanged. Fixed rates have largely priced the move in already.
A single decision rarely settles the fixed-or-tracker question on its own, because fixed pricing moves on swap rates and the wider inflation picture rather than the base rate alone. What the 5 November meeting does is set the near-term direction for tracker payments and test whether the rises markets expect actually arrive. You can follow where the market expects the base rate to head in our rate forecast. The gap to trackers opened this wide after HSBC and other major lenders started raising fixed rates in late July and kept repricing through September. The practical step is to choose the product that fits your circumstances and your tolerance for movement, rather than waiting on one meeting.
If your current fixed rate ends within the next six months and you are deciding between a fix and a tracker before 5 November, call 01202 155992 or contact Mortgage One.
Back to Rate Forecast and Economic Drivers
The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.
Frequently asked questions
1. Is a fixed or tracker mortgage better in 2026?
Neither is universally better. A fixed rate suits you if you value certainty and want protection against rates rising, while a tracker suits you if you want a lower starting rate and can absorb increases. With markets expecting the base rate to rise and trackers priced well below fixes, the right choice depends on your budget, your plans and how much payment movement you can tolerate. Advice tailored to your circumstances is the most reliable way to decide.
2. Is a tracker mortgage a good idea right now?
A tracker can be a good idea if you could afford higher payments should the base rate rise and you want flexibility, particularly if you might repay early or move soon. At the end of September 2026 the average two-year tracker was 1.49 percentage points cheaper than the average two-year fix. The risk is that each base rate rise feeds straight into your payment. Whether it suits you comes down to your finances and your view on where rates are heading.
3. Do tracker mortgages have early repayment charges?
Many trackers have low or no early repayment charges, which is part of their appeal, but this is not guaranteed. Some products do apply a charge, so you should always check the terms before assuming you can switch or repay penalty-free. If keeping the freedom to move matters to you, make it a key question when comparing deals.
4. Will a tracker mortgage get cheaper if the base rate is cut?
Yes. A tracker follows the Bank of England base rate plus a set margin, so if the base rate is cut your interest rate and monthly payment fall in line with it. The reverse is also true: if the base rate rises, your payments increase. The margin above the base rate stays the same for the life of the tracker term.
5. Can I switch from a tracker to a fixed rate?
Yes. Most lenders let you move from a tracker to a fixed rate, and because trackers often carry low or no early repayment charges you can usually switch without a large penalty. Check your own deal’s terms first, as a minority do apply charges. The fixed rates on offer when you switch may differ from those available today.
6. What happens to my tracker after the deal period ends?
When a tracker deal period ends you usually move onto your lender’s standard variable rate, which is typically higher and can change at any time. To avoid that, line up a new deal before the tracker ends, whether another tracker, a fixed rate or a product transfer with your current lender. Acting before the deal ends is almost always cheaper than drifting onto the standard variable rate.
7. Should I wait for the 5 November Bank of England decision before deciding?
Waiting for a single decision rarely pays. Fixed rates move on swap rates and the inflation outlook rather than the base rate alone, so they can change before and after any meeting, and markets were already pricing a rise for 5 November 2026. Reserving a rate now and switching if pricing improves usually beats trying to time one announcement.
8. What are the disadvantages of a tracker mortgage?
The main disadvantage is uncertainty. Your payment rises with every base rate increase, most trackers have no cap, and budgeting is harder than on a fixed rate. Some trackers also carry a collar that limits how far the rate can fall, and a term tracker reverts to the lender’s standard variable rate when the deal ends. Checking these terms before you commit avoids surprises later.