Fixed, Tracker or Standard Variable: Choosing a UK Mortgage Rate Type
Published 26th August 2026
Every mortgage decision eventually comes down to one question: do you want certainty, or do you want to follow the market? Everything else is detail. The catch is that certainty has a price, that price moves, and the default option if you decide nothing is by some distance the worst one available.
Where Rates Sit Right Now
Bank Rate has been 3.75% since 18 December 2025, following cuts from 5.00% in August 2024, 4.75% in November 2024, 4.50% in February 2025, 4.25% in May 2025 and 4.00% in August 2025. The Monetary Policy Committee has held it at every meeting since.
Mortgage pricing has not fallen as far as Bank Rate, because fixed rates are priced off swap markets rather than off the base rate directly. The Bank of England's own quoted rates series for August 2026 puts the average two-year fix at 75% loan to value at 4.92%, the five-year fix at 4.78%, and the average revert-to-rate, which is the standard variable rate borrowers land on, at 6.58%.
Fixed Rate
Your rate is locked for the deal period, usually two or five years, occasionally ten. The payment does not move whatever happens to Bank Rate.
What you are buying is a known number for budgeting. What you are giving up is the benefit of any fall, and flexibility: a fix almost always carries an early repayment charge, tapering across the deal period, and a cap on how much you can overpay each year, conventionally 10% of the balance.
Two years or five?
| Two-year fix | Five-year fix | |
|---|---|---|
| Certainty | Short | Long |
| Fee frequency | Refinance every two years | Refinance every five |
| If rates fall | You re-price sooner | You are stuck, or pay an ERC |
| If rates rise | Exposed sooner | Protected longer |
| Typical ERC in year one | Around 2% | Around 5% |
| Moving house | Easier to time | Depends on porting |
Historically the five-year fix carried a premium for the extra certainty. At the moment it does not: the five-year average is below the two-year at 75% LTV, which tells you the market expects rates to be lower in a few years than they are today. That inversion is unusual and it changes the calculation, because you are no longer paying extra for the longer lock.
Tracker
A tracker follows Bank Rate plus a fixed margin, for example Bank Rate plus 0.79%, and moves within a month or two of an MPC decision. It cannot drift on the lender's whim, which is the main advantage over other variable products.
Two things to check in the paperwork. A collar sets a floor below which your rate will not fall however far Bank Rate goes, which can quietly remove much of the benefit. And some trackers carry early repayment charges while others do not: the ones without are genuinely useful if you expect to move, inherit or come into money during the deal.
A tracker suits someone who can absorb an increase and wants to capture falls without paying an exit fee to do it. It is a poor fit for a household with no slack in the monthly budget.
Discounted Variable
A discount off the lender's standard variable rate for a set period, say SVR minus 2%. It looks like a tracker and behaves differently in one important respect: the lender sets the SVR, so it can move the underlying rate without any MPC decision at all. You are trusting the lender's pricing rather than following a published rate.
Standard Variable Rate: The Expensive Default
When your deal ends, you are moved onto the lender's SVR unless you do something. Nobody chooses it and roughly nobody should be on it.
What the default costs
A £200,000 balance with 20 years remaining.
- On a 4.78% five-year fix: £1,295.73 a month
- On the 6.58% average revert rate: £1,500.58 a month
That is £204.85 a month, or £2,458 a year, for the sole reason of not having opened the letter.
The one genuine merit of an SVR is that it almost never carries an early repayment charge, so you can leave, overpay or clear the balance at any time. That makes it a reasonable place to sit for a month or two while you are selling, or while a remortgage completes. It is not a place to spend a year.
Offset
An offset mortgage links savings accounts to the mortgage, and you pay interest only on the difference. Keep £20,000 in an offset account against a £200,000 mortgage and you are charged interest on £180,000, while the £20,000 stays yours to withdraw.
The saving is effectively a tax-free return at your mortgage rate, which at 4.78% beats most easy-access savings accounts after tax for a higher rate taxpayer. Offset rates are usually a little above equivalent standard products, so the question is whether your typical savings balance is large enough to earn back the difference. As a rough test, it starts to make sense somewhere around 10% of the mortgage balance held consistently.
How to Choose
Four questions, in order.
- Could you absorb a payment rise of a few hundred pounds without difficulty? If not, fix. This outranks everything else, including any view you have about where rates are going.
- How long are you staying? If you are likely to move within two years, a long fix with a heavy ERC and uncertain porting is a poor shape, even at a good rate.
- Do you expect a lump sum? A bonus, a sale, an inheritance. Check the overpayment allowance and the ERC before you commit, not after.
- How much is the fee, in the context of your balance? A £999 product fee on £120,000 is worth more than the headline rate difference it buys. On £400,000 it usually is not.
Do Not Try to Time the Market
The temptation with rates falling is to sit on a tracker or an SVR waiting for the bottom. Two problems with that. The bottom is only visible afterwards, and fixed rates have already priced in the cuts markets expect, which is exactly why the five-year fix currently sits below the two-year. You are not getting ahead of the market by waiting; you are paying today's variable rate for the privilege of guessing.
The far more reliable win is the boring one: know the date your deal ends, start looking six months before it, and never let yourself roll onto the SVR by accident.
Run your own balance and remaining term through our mortgage calculator at each of the rates above. Seeing your actual monthly figure at 4.78% next to 6.58% is usually all the motivation anyone needs to diarise the end of their deal.