A fixed rate stays exactly the same for an agreed term (usually 2 or 5 years), giving you certainty but no benefit if rates fall. A tracker moves directly with the Bank of England base rate, so your payment changes when the base rate does — cheaper when rates fall, more expensive when they rise. A discount mortgage is a third, less-known option: a fixed discount off your lender's own standard variable rate, which the lender can change independently of the Bank of England.
Fixed rate: certainty, at a price
A fixed-rate mortgage locks your interest rate for a set period — most commonly 2 or 5 years, though shorter and longer terms exist. Whatever happens to the base rate during that time, your payment doesn't move. As of August 2026, one of the lowest 5-year fixed rates available is around 4.48%, which on a £200,000 mortgage over 30 years works out to roughly £1,015 a month.
- Genuine upside: predictable budgeting, no exposure if rates rise during your term.
- Genuine downside: if rates fall after you fix, your payment doesn't fall with them — you're locked in until the term ends or you pay an early repayment charge to leave early.
- Interestingly, in 2026 average 5-year fixed rates have been sitting slightly below average 2-year fixed rates — an unusual inversion that reflects how much near-term uncertainty lenders are currently pricing in.
Tracker: moves directly with the base rate
A tracker mortgage follows the Bank of England base rate plus a fixed margin, moving up or down exactly when the base rate does. As of August 2026, one of the leading 5-year tracker deals sits at base rate + 0.60%, currently working out to around 4.35% — on the same £200,000 mortgage over 30 years, that's roughly £996 a month, slightly less than the fixed example above at today's rates.
The comparison above is a snapshot, not a rule — which one actually costs less over the full term depends entirely on what the base rate does while you hold the mortgage, and that's genuinely not knowable in advance. Trackers typically come with fewer early exit penalties than fixed deals too, which suits borrowers who want more flexibility to switch later.
A discount mortgage is a different product that often gets lumped in with trackers. It gives you a fixed discount off your lender's own Standard Variable Rate (SVR) — but the SVR itself isn't tied directly to the base rate, and your lender can change it at their own discretion, on their own timeline. A tracker's link to the base rate is contractual and transparent; a discount mortgage's link to the SVR is not.
How to actually decide
The more useful framing isn't "which one will win" — nobody can reliably call that — it's "what can my budget actually absorb." A few honest questions worth asking yourself:
- Could your monthly budget handle a genuine increase if a tracker rate rose over your term? If the honest answer is no, a fixed rate removes that risk entirely rather than hoping it doesn't happen.
- Do you have a financial cushion and some comfort with uncertainty? A tracker rewards that, historically, more often than it punishes it — though the last few years are a reminder that isn't guaranteed.
- How likely are your circumstances to change during the term? If you might need to move, remortgage, or overpay significantly, check both the early repayment charges and the overpayment allowances on any deal before committing — not just the headline rate.
Whichever you choose, compare the full picture — APRC, product fees, early repayment charges and overpayment rules — not just the advertised rate. A slightly higher headline rate with no fee can genuinely beat a lower rate with a hefty arrangement fee, depending on how long you'll actually hold the deal.