The interest rate on a tracker mortgage stays directly proportional to another base interest rate, plus a few percentage points.
Often, tracker mortgages will directly follow the up and down increases and decreases of the Bank of England’s base rate, and, for example, will stay 0.5% above it at all times, changing as it does. This means that the rate may change differently to the standard variable rate of the lender.
The tracker mortgage is likely to track the base rate for a short term until it defaults to the standard variable rate of the lender.
This helps to keep the mortgage payments more predictable and fair for the borrower, while making sure that the lender doesn’t lose out should the Bank of England’s base rate jump up.
The rate that a tracker mortgage tracks, however, may not be the Bank of England’s base rate, and so you need to look into what rate the deal stays in line with and see how likely it is for that rate to change and fluctuate.