Mortgage Rates Explained: Fixed, Variable & Tracker UK
Fixed, variable, tracker and SVR are the main UK mortgage rate types. This guide explains how each one works, what moves rates, and how to choose.
The interest rate on your mortgage decides how much you pay on top of what you borrow. Across a typical mortgage term of 25 to 30 years, a difference of as little as 0.25% can add up to thousands of pounds, either paid out or saved. That impact is large, yet plenty of borrowers pick a rate type on nothing more than the lowest number on a comparison table. They rarely stop to ask how that rate will behave over the years, or what risk sits behind it.
The UK mortgage market has four main rate types: fixed rates, standard variable rates (SVR), tracker rates, and discounted variable rates. Which one suits you depends on your finances, how much risk you are comfortable with, and how long you expect to stay put. A fixed rate buys you certainty but ties you in for the deal period. A tracker follows the Bank of England base rate, so it can climb or fall. An SVR is the default rate your lender moves you onto once a deal ends, and it usually costs more than any of the others.
Below, you will see how each rate type behaves over time, how they compare when set against each other, and how a change in the Bank of England base rate reaches your monthly payments. A first-time buyer picking a first mortgage, a homeowner who wants to remortgage before a deal runs out, and a landlord checking a portfolio all face the same question. Understanding how mortgage rates work is often what separates a deal that fits from one that quietly costs more than it should.
How mortgage interest rates work
The interest rate on a mortgage is the yearly cost of borrowing, shown as a percentage. Say you borrow £200,000 at 4.5% on a repayment mortgage over 25 years. Each monthly payment covers the interest charged that month plus a slice of the original loan (the capital). Early on, most of what you pay is interest. As the balance falls, that interest share drops and a bigger part of each payment starts clearing the capital.
Several things feed into UK mortgage rates: the Bank of England base rate, the cost of funding in wholesale money markets (called swap rates), a lender’s own running costs, and how hard lenders are competing for business. When the base rate goes up, borrowing gets dearer for lenders, and they usually pass that on through higher mortgage rates. When it comes down, rates tend to follow, though not always straight away or by the full amount.
The interest rate on a mortgage is the yearly cost of borrowing, shown as a percentage. Borrow £200,000 at 4.5% on a repayment mortgage over 25 years and each monthly payment covers the interest charged that month plus a slice of the original loan (the capital). Our repayment calculator shows how the payments break down at different rates.
Several things feed into UK mortgage rates: the Bank of England base rate, the cost of funding in wholesale money markets (called swap rates), a lender’s own running costs, and how hard lenders are competing. Your loan-to-value ratio, the size of your mortgage against the property value, matters too: a lower LTV usually earns you a better rate. When the base rate rises, borrowing gets dearer for lenders, and they tend to pass that on through higher mortgage rates.
What are swap rates?
Swap rates are the rates at which banks lend to each other over fixed periods, such as 2-year or 5-year swaps. They feed straight into how fixed-rate mortgages are priced. When swap rates climb, new fixed-rate deals usually get more expensive, even when the Bank of England base rate has not moved.
Fixed-rate mortgages
A fixed-rate mortgage holds your interest rate steady for an agreed period, usually two, three or five years, with some lenders going up to seven or ten. Whatever the Bank of England base rate does over that time, and whatever happens in the wider economy, your monthly payment stays the same. Budgeting is simple, and you are shielded from any rate rises.
What you give up is flexibility. Most fixed deals carry early repayment charges (ERCs), fees you pay if you leave before the deal ends. They usually run between 1% and 5% of the balance still owed, so on a £200,000 mortgage that could be a charge of anywhere from £2,000 to £10,000. And if rates drop while you are fixed, you miss out, because you are held at the rate you signed up to.
A fixed-rate mortgage holds your interest rate steady for an agreed period, usually two, three or five years, and some lenders go up to seven or ten. Through that time your monthly payment stays the same, whatever the Bank of England base rate does. Budgeting is simple, which is why fixes are so popular with first-time buyers who want to know exactly what leaves their account each month.
What you give up is flexibility. Most fixed deals carry early repayment charges (ERCs), fees you pay if you leave before the deal ends. They usually run between 1% and 5% of the balance owed, so on a £200,000 mortgage that could mean £2,000 to £10,000. You also miss out if rates fall while you are fixed, since you stay at your agreed rate. Our overpayment calculator shows how extra payments can chip away at the cost of a higher fixed rate.
Common fixed-rate terms
Around 80% of UK mortgage borrowers currently pick a fixed rate. Knowing your exact payment every month is hard to beat, and that appeal grows when the economy feels uncertain.
Variable, tracker, and SVR mortgages
Variable-rate mortgages take a few different forms, but they have one thing in common: the interest rate can move during the term, so your monthly payments can rise or fall.
A tracker mortgage is tied directly to the Bank of England base rate. Your lender adds a set margin above the base rate, or now and then below it, say base rate plus 0.75%. So if the base rate sits at 4.5%, you pay 5.25%. Drop the base rate to 4% and your rate falls with it, to 4.75%. You can always see how your rate is worked out, which makes trackers clear to follow, but they leave you open to the base rate going up.
A standard variable rate (SVR) is the fallback rate your lender charges once your opening deal (fixed, tracker or discounted) comes to an end. The lender sets the SVR however it likes and can move it up or down at any time, by any amount. SVRs sit well above the rates on new deals almost every time, so remortgaging before your current deal runs out is usually the smart move.
Variable-rate mortgages take a few forms, but they share one trait: the rate can change during the term, so your monthly payments can go up or down. Getting to grips with each type helps you judge how much you can borrow and what sits comfortably in your budget.
A tracker mortgage is tied directly to the Bank of England base rate. Your lender adds a set margin above it, or occasionally below, say base rate plus 0.75%. If the base rate is 4.5%, you pay 5.25%. If it drops to 4%, your rate falls to 4.75% on its own. You can see exactly how the rate is built, which makes trackers easy to follow, though a rising base rate will push your payments up. Buy-to-let landlords sometimes lean toward trackers for that flexibility.
A standard variable rate (SVR) is the fallback rate your lender charges once your opening deal (fixed, tracker or discounted) ends. The lender sets it at its own discretion and can raise or lower it whenever it wants, by whatever amount. SVRs are nearly always higher than the rates on new deals, which is why it pays to remortgage before your current deal expires.
Rate types at a glance
| Fixed Rate | Tracker / Variable |
|---|---|
| Payment stays the same for the deal period | Payment moves with the base rate (tracker) or lender’s discretion (SVR) |
| Straightforward to budget for | Could pay less if rates fall |
| Protected from base rate increases | Could pay more if rates rise |
| Early repayment charges apply if you leave early | Trackers often have lower or no ERCs |
How the Bank of England base rate affects your mortgage
The Bank of England’s Monetary Policy Committee (MPC) meets eight times a year to set the base rate, the rate the Bank charges other banks and building societies to borrow. This is the biggest single influence on UK mortgage pricing. Raise the base rate and borrowing gets pricier right across the economy; cut it and borrowing gets cheaper.
On a tracker, a base rate change reaches you almost at once, with payments moving the following month. On an SVR, your lender might pass on some, all or none of it, since it is under no obligation. On a fixed rate, nothing changes until your deal ends. But the base rate on the day your fix expires shapes the deals waiting for you when you remortgage.
The Bank of England’s Monetary Policy Committee (MPC) meets eight times a year to set the base rate, the rate the Bank charges other banks and building societies to borrow. It is the biggest single influence on the UK mortgage market, and it feeds through to how much you can borrow. When the MPC lifts the base rate, borrowing gets more expensive across the economy; when it cuts, borrowing gets cheaper.
On a tracker, a base rate change hits you straight away, with payments shifting the next month. On an SVR, your lender may pass on some, all or none of the move, since it is not obliged to. On a fixed rate, you feel nothing until the deal ends. Even so, the base rate at the point your fix expires decides the deals open to you when you remortgage.
Don’t sit on your lender’s SVR
Once your fixed or tracker deal ends, you slide onto your lender’s SVR by default. In the UK that SVR usually runs 1.5% to 2% above the best rates on offer. On a £200,000 mortgage, that gap can add £250 to £350 to your monthly payment. Start hunting for your next deal at least 3 to 6 months before the current one runs out.
Fixed rate holders
- Base rate moves do not touch you during the deal. Line up your remortgage 3 to 6 months before the fix ends.
Tracker rate holders
- Payments shift on their own when the base rate moves. Leave room in your budget in case rates climb.
SVR holders
- Your lender can change your rate whenever it likes, and you are almost certainly paying more than you need to. Talk to a broker about switching.
How to choose the right rate type for you
There is no single best mortgage rate type; the right one depends on your own situation and finances. If certainty matters to you and you want to know your payment to the penny each month, a fixed rate is usually the safer bet, especially when you are stretching to afford the property. If you think rates are heading down and you can stomach some risk, a tracker might save you money. And if you expect to move or remortgage within a year or two, a tracker with no early repayment charges keeps your options open.
Think about how long you plan to stay, whether your budget could take a payment rise, and where you reckon interest rates are going. A mortgage broker can run the scenarios for you and show what you would actually pay under each rate type at different base rate levels.
There is no single best mortgage rate type; the right one comes down to your circumstances and finances. If certainty matters and you want to know your exact payment each month, a fixed rate is usually safer, especially if you are stretching your budget to buy. If you expect rates to fall and can handle some risk, a tracker could save you money. And if you might move home or remortgage within a year or two, a tracker with no early repayment charges gives you room to act.
Weigh up how long you plan to stay, whether your budget can absorb a payment increase, and which way you think interest rates are heading. A mortgage broker can model the options and show exactly what you would pay under each rate type at a range of base rate levels. Get in touch for free, no-obligation advice built around your situation.
Decision framework
- 01
Assess your risk tolerance
If the idea of a rising payment keeps you up at night, lean toward a fixed rate. If your budget could take a £200 to £300 rise each month without strain, a tracker is worth a look.
- 02
Consider your timeframe
Match the deal length to your plans. If you might sell within two years, a 5-year fix with ERCs could sting. A 2-year fix, or a tracker with no ERCs, leaves you freer to move.
- 03
Look at the rate environment
When rates are high and tipped to fall, a tracker starts to look attractive. When rates are low and likely to climb, fixing locks your payments in before they rise.
- 04
Factor in fees
A tempting headline rate can hide a bigger arrangement fee, often £500 to £1,500. Compare the total cost over the whole deal period, not the rate on its own.
Run the numbers
- Repayment CalculatorFree tool
Put in your mortgage amount, rate and term to see your monthly repayments and the total interest you would pay over the full term.
- Overpayment CalculatorFree tool
See how overpayments could shorten your term and save you thousands in interest, which is handy when you are weighing up rate options.
When to lock in your rate
Timing counts in the mortgage market. Most lenders let you reserve a rate 3 to 6 months before your mortgage needs to complete, something called a rate reservation or rate lock. If rates rise inside that window, you are covered, because your deal is already secured. If rates fall, some lenders will let you switch to a better product before completion at no extra cost.
If you are remortgaging, you can get going up to six months before your current deal ends. That gives you time to weigh the options instead of deciding in a hurry. Your new lender will usually issue a mortgage offer that stays valid for three to six months, which works as a useful safety net.
Timing counts in the mortgage market. Most lenders let you reserve a rate 3 to 6 months before your mortgage completes, known as a rate reservation or rate lock. If rates climb during that window, you are protected, because the deal is already yours. Knowing how mortgage rates move can help you judge when to commit.
If you are remortgaging, you can start up to six months before your current deal expires. That leaves time to compare options rather than rushing the decision. Your new lender will usually give you a mortgage offer valid for three to six months, so you have a safety net in place.
The 6-month rule
Set a reminder for 6 months before your current mortgage deal expires. That gives you the widest window to compare rates, apply and get an offer in place, so you never slip onto your lender’s SVR.
The costliest mistake is rarely picking the wrong rate type. It is doing nothing when a deal ends and drifting onto the lender’s SVR. That one bit of inaction can cost hundreds of pounds every month.
Related guides
- When and How to Remortgage
Switch at the right moment and you could save hundreds a month. Walk through the full remortgage process.
- What Is Loan-to-Value (LTV)?
Your LTV ratio sets which rate bands you qualify for, and how good a deal you can land.
- First-Time Buyer Guide
Choosing between fixed and tracker rates is one of the biggest decisions for first-time buyers.
- A Guide to Remortgaging
The whole remortgage process, from checking your current deal to locking in a new rate.
Frequently asked questions
- Regulator
- FCA register
- Updated
- 24 February 2026
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