Fixed vs Tracker Mortgage Rates: Why Fixed Rates Might Be the Better Choice In 2025

Thinking about whether to choose a fixed or tracker mortgage? Currently, fixed rates are actually lower than tracker rates for similar terms, which could be a sign that the Bank of England might cut interest rates again soon. But does this mean locking in a fixed rate is the smarter move? Not necessarily. Here we’ll dive into the factors you need to consider, from market trends to long-term stability, so you can make an informed decision in today’s ever changing mortgage landscape. Stay with us to find out why a fixed rate might just be the strategic choice you need right now.

Fixed vs Tracker: Think ahead

Why Choose a Fixed-Rate Mortgage Now?

A fixed-rate mortgage locks your interest rate for a set period, usually two, three or five years, therefore offering you stability and predictable payments. Here’s why fixed rates might be the smarter choice in 2025:

Pros of Fixed-Rate Mortgages:

• Lower Starting Rates: with further cuts to the base rate expected, fixed rates are currently lower than tracker rates.

• Stability: Your monthly payments remain consistent, no matter what happens to interest rates.

• Protection from Rate Increases: You’re safeguarded against any future rate hikes.

While fixed-rate mortgages traditionally come with slightly higher rates than trackers, this current shift presents an opportunity for those seeking security and immediate savings.

Tracker Mortgages: A Riskier Bet in the Current Climate?

Tracker mortgages adjust with the Bank of England Base Rate, offering lower initial costs when rates are stable or falling. However, with fixed rates now cheaper than tracker rates, the potential for savings is less certain. If rates continue to drop, tracker mortgages may regain their appeal, but for now, they carry more risk and unpredictability.

Key Considerations:

• Fixed Rates: Offer stability, but you might miss out on savings if base rates drop quickly.

• Tracker Rates: A flexible option that could save you money if rates fall as expected, but there’s a risk of higher payments if rates don’t drop as predicted.

• Key Question: Do you value the security of fixed payments, or are you willing to gamble on a tracker in the hope that rates drop sooner rather than later?

Tracker vs Fixed Rate, Which Mortgage Option is Right for You?

Choose a Fixed Rate Mortgage if:

• You value consistent payments and long-term stability.

• You want to take advantage of a lower fixed rate before further changes.

• You prefer protection from potential market volatility.

Choose a Tracker Mortgage if:

• You’re comfortable with fluctuating payments and want to benefit from potential future rate drops.

• You need flexibility to switch products or pay off some or all your mortgage early. (many tracker rates are offered with no Early Repayment Charges)

Can I Fix for Five Years but be Tied in just for Two?

At the moment, yes you can. A lender currently offers a rare product, a 5-year fixed mortgage with a 2-year tie-in, quite a scarcity! This option blends the stability of a fixed rate with the flexibility to exit after just two years, ideal for borrowers who value predictable repayments but also need the freedom to adjust to evolving circumstances, such as relocating or remortgaging to a better deal. However, this flexibility comes at a cost, with rates higher than a standard 2-year fixed.

Mortgage products can change quickly, so don’t forget to consult a mortgage broker who can help you find the best options available.

Remember, Your Mortgage Decision Isn’t Set in Stone

Choosing a mortgage deal now doesn’t mean you’re locked in for good. The mortgage market can shift quickly, and many deals booked today can still be adjusted if rates improve, as long as you haven’t completed on your mortgage. This flexibility allows you to secure a rate that suits you now without the pressure of predicting the future perfectly. Rest assured, you’ll have the opportunity to switch to a better deal if the market moves in your favour before completion.

Final Thoughts

The current situation of fixed rates being lower than tracker rates offers a good opportunity for borrowers. Locking in a fixed-rate mortgage now could deliver immediate savings and long-term peace of mind. However, a tracker mortgage, while clearly the riskier option, might result in lower overall costs but only if the base rate drops significantly and quickly.

Balancing stability against potential savings requires careful thought, so it’s essential to weigh up the risks and benefits before committing.

Not sure which option works best for you?

Get in Touch

and let us help work out what's right for you!

Your home may be repossessed if you do not keep up repayments on your mortgage.

Published by Adrian Collins, Founder of Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.