Tracker vs Fixed
Tracker vs Fixed Mortgages in March 2026: The Gap Has Never Been Wider
With fixed rates surging 50-90bp while the base rate sits unchanged at 3.75%, the gap between tracker and fixed deals has opened to its widest point in years. We crunch the numbers on which makes sense for different borrowers.
A Divergence Worth Understanding
Something unusual is happening in the UK mortgage market. Fixed rates have risen sharply — 50 to 90 basis points across major lenders since late February — but tracker rates have barely moved. The reason is straightforward: fixed rates follow swap rates (which have surged on inflation fears), while tracker rates follow the Bank of England base rate (which has not changed).
The result is the widest gap between tracker and fixed pricing since the mini-budget crisis of 2022, and it is forcing borrowers to make a genuinely difficult decision.
The Numbers: March 2026
| Product (75% LTV Purchase) | Best Fixed | Best Tracker | Gap |
|---|---|---|---|
| 2-Year | 4.32% (NatWest) | 3.55% (Barclays, BoE+0.80%) | 0.77% |
| 5-Year | 4.52% (NatWest) | 3.70% (Barclays, BoE+0.95%) | 0.82% |
On a £250,000 mortgage over 25 years, the 2-year tracker saves approximately £96 per month compared to the equivalent fix — that is £2,304 over the 2-year term. But the tracker carries risk the fix does not.
The Break-Even Calculation
The critical question: how much would the base rate need to rise before the tracker becomes more expensive than the fix?
If you take the 2-year tracker at base + 0.80% (currently 4.55%) versus the 2-year fix at 4.66%, the tracker is already cheaper by 11bp. For the tracker to match the fix, the base rate would need to rise by just 11bp — essentially, a single small hike.
However, when comparing the best tracker (Barclays at 3.55%) against the best fix (NatWest at 4.32%), the base rate would need to rise by 77bp — that is three 25bp hikes — before the tracker costs more. And it would need to rise to that level and stay there for the entire 2-year term to fully eliminate the tracker's advantage.
What Markets Are Pricing
Two-year swap rates at 4.1% imply the market expects the base rate to average around 4.0–4.1% over the next two years. That represents roughly one 25bp hike from the current 3.75%, with rates then remaining elevated.
If this plays out, a tracker at base + 0.80% would average approximately 4.80–4.90% over two years — more expensive than today's 2-year fix at 4.32%. The market, in other words, is pricing fixed deals as fair value and tracker deals as a bet on lower rates.
Who Should Choose What
Choose a Fixed Rate If:
- You are on a tight budget and cannot absorb payment increases
- You believe Middle East tensions will persist, keeping inflation elevated
- You value certainty and sleep over potential savings
- Your mortgage is a large proportion of your income
Choose a Tracker If:
- You have financial headroom to absorb a 0.5–1.0% rate increase
- You believe the geopolitical situation will stabilise, allowing the BoE to resume cutting
- You want the option to remortgage without early repayment charges (many trackers allow penalty-free exit)
- You are comfortable with the risk-reward trade-off
The Hybrid Approach
Some borrowers are splitting their mortgage: taking part on a fix for security and part on a tracker for upside. Not all lenders offer this, but it is worth discussing with a broker if you are torn between the two.