Applications for tracker mortgages increased more than threefold in April compared to March, according to broker L&C Mortgages, as economic uncertainty prompted borrowers to reconsider fixed-rate products that have dominated the UK market.
The shift comes as geopolitical tensions have pushed up swap rates used by lenders to price fixed-rate mortgages, creating a pricing gap between the two product types. The Bank of England maintained its base rate at 3.75% at the end of April, where it has remained since a December cut, but warned that conflict in Iran could necessitate rate rises later in 2025 due to “higher inflation is unavoidable”.
Current rate comparison
At present, the cheapest two-year fixed-rate mortgages for remortgage customers stand at approximately 4.55%, while the most competitive two-year trackers offer rates around 3.96%. On a £250,000 repayment mortgage with 20 years remaining, the fixed rate would cost £1,588 monthly compared to £1,510 for the tracker—a difference of £78 per month.
“They are back in the conversation,” said Nicholas Mendes at broker John Charcol. David Hollingworth at L&C Mortgages noted that borrowers should “think about what your own degree of tolerance is, and how well-placed financially you would be to deal with that”.
Bank of England outlook
The Bank of England presented a scenario in which the base rate could rise to approximately 5.25% by early 2027. However, Governor Andrew Bailey indicated rates could remain unchanged this year if the conflict resolves quickly. Under the worst-case scenario, a tracker mortgage would see its rate increase to 5.46%, while fixed-rate borrowers would remain protected at 4.55% for the two-year term.
Mark Harris at broker SPF Private Clients said the decision depends on “whether you can afford to be wrong—that is, if rates were to rise, would you be able to afford your mortgage?”
Product flexibility considerations
Many tracker products carry no early repayment charges, allowing borrowers to switch to fixed rates if pricing improves. Halifax and Nationwide are among lenders not applying early repayment charges to trackers, whilst NatWest does impose such fees. Some tracker deals from Nationwide, NatWest and Barclays carry no product fee, though interest rates on these products are typically higher than those with arrangement fees.
Arrangement fees on tracker mortgages commonly range from £900 to £1,000. Halifax’s 3.96% tracker carries a £1,499 fee for borrowers taking between £75,000 and £1m. Mendes cautioned that “arrangement fees, valuation fees, or legal costs can still matter if the plan is to use the tracker for only a few months before switching again”.
The market shift reflects broader uncertainty in the mortgage sector, as lenders adjust pricing in response to economic conditions. While Rightmove faces legal challenges and leasehold reform continues to develop, mortgage product selection remains a key consideration for property buyers and those remortgaging.
Brokers advise that tracker mortgages may suit borrowers with financial reserves and comfortable affordability margins who can absorb potential payment increases. The products offer a holding position for those anticipating either rate decreases or improved fixed-rate pricing in coming months.