A tracker mortgage is very much like any other mortgage in most ways. However, whereas the standard variable rate mortgage interest rate is set by the lender, a tracker mortgage has its interest rate set with reference to in most cases, the Bank of England’s Base Rate.
The Bank of England reviews its base rate every month and sets the rate as a means of setting the cost of money banks ‘buy in’. As the rate rises lending rates are likely to follow. With a tracker mortgage the mortgage interest rate specifically tracks indices like the Bank of England Base Rate.
If the Tracker Mortgage interest rate is set at 2% above Bank of England Base Rate then if the Base Rate were to rise from 0.5% to say 1%, then the mortgage interest rate would rise accordingly from 2.5% to 3%.
At the time of writing (November 2015) the Bank of England Base Rate remains at an historically low 0.5%. Base Rates can rise for many reasons but generally, as the economy grows and inflationary pressures are felt in the general economy, the Bank of England will aim to gradually increase their Base Rate to control inflation and protect the value of the currency.
It’s worth noting that in most scenarios, a bank’s standard variable rate will probably rise and fall as the Bank of England’s Base Rate rises and falls anyway. But a Tracker Mortgage makes this link explicit.
For more information about tracker mortgages contact us or speak to a mortgage adviser on 01628 507477.
Download our Free First Time Buyers Guide
Recent posts
Almost one in five equity release mortgages are now taken out to provide financial support to family.
Buyers purchasing properties sooner
2 days ago
According to industry data, the expected wait for those looking to buy a property has dropped from just over 11 months to less than six months.
It is common for your first mortgage payment to be higher than your subsequent monthly payments for two reasons.
What to do just before you get your keys
7 days ago
Firstly, a big congratulations, you’ve now exchanged contracts! After weeks and months of waiting, you are about to move in. What should you do first?
The chancellor will deliver her second budget this autumn. Due to slow economic growth and high inflation, the government need to manage a £40 billion shortfall in public finances. There have already been reports about changes to taxes including income tax and capital gains tax.
Landlords could face a new tax this autumn
29 Aug 2025
The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income.
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.
More than a quarter of UK adults in long-term relationships (26%) have reported that despite living together, they keep their finances separate from one another.
More information
Trusted by
