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

Choosing between fixed vs tracker rate mortgages? There’s a unique trend you shouldn’t miss. Right now, fixed rates are lower than tracker rates for similar terms, a rare occurrence in the mortgage market. This could hint at potential cuts to the Bank of England Base Rate, making fixed rates an appealing option. Stay tuned as we explore why locking in a fixed rate might be a smarter move in today’s market.

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 - offering 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 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 rates 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 your mortgage early.

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

Yes you can! A lender currently offers a rare product, a 5-year fixed mortgage with a 2-year tie-in. 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 refinancing. 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 unique opportunity for borrowers. Locking in a fixed-rate mortgage now could deliver immediate savings and long-term peace of mind, particularly with potential rate cuts on the horizon. 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 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 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.