Finance glossary
Tracker Mortgage
In simple terms
A tracker mortgage follows the Bank of England base rate. Your rate is set at a fixed amount above the base rate, so your payments go up or down whenever the base rate changes.
On this page
What does tracker mortgage mean?
A tracker mortgage is a type of variable-rate mortgage. Its interest rate is pegged to an external rate — almost always the Bank of England base rate — plus a set margin, for example “base rate plus 0.75%”.
Because it follows the base rate directly, the lender cannot change the margin at will. When the base rate moves, your rate moves by the same amount, in the same direction.
How a tracker mortgage works
Trackers usually run for an introductory period, such as two or five years, before reverting to the lender’s standard variable rate. Some are “lifetime” trackers that follow the base rate for the whole mortgage term.
If the base rate rises by 0.25 percentage points, your rate rises by 0.25 too, and your monthly payment increases. If it falls, your payment falls — though some trackers have a “collar”, a floor below which the rate will not drop.
How could this affect me?
A tracker can be cheaper than a fixed rate when the base rate is low or falling, and you benefit immediately from any cuts. But your payments are not guaranteed — they can rise if the base rate goes up.
Trackers suit borrowers who can absorb payment increases and want to benefit from possible rate falls. If certainty matters more, a fixed rate protects you from rises for a set period.
Things to watch out for
- Your payments can rise without warning if the Bank of England raises the base rate.
- Some trackers have a “collar” or floor, so your rate stops falling at a set level even if the base rate keeps dropping.
- When the deal period ends you revert to the lender’s standard variable rate, which is usually much higher.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- Bank of England, Interest rates and Bank Rate (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Types of mortgage (opens in a new tab). Accessed 22 Aug 2026.