With the Bank of England base rate at 4.50%, choosing between fixed and variable rates is more important than ever. We compare the pros and cons to help you decide.
What Is a Fixed Rate Mortgage?
A fixed rate mortgage locks in your interest rate for a set period — typically 2, 3, 5, or 10 years. During this period, your monthly payments stay exactly the same regardless of what happens to the Bank of England base rate or the wider economy.
This predictability is the main advantage of fixed rates. You know exactly what you'll pay each month, making it easier to budget. It also protects you if interest rates rise during your fixed period.
The downside is that if rates fall, you won't benefit — you're locked in at the higher rate. And if you want to leave your fixed deal early (for example, to remortgage or move house), you'll usually face an Early Repayment Charge (ERC), which can be substantial.
What Is a Variable Rate Mortgage?
Variable rate mortgages come in several forms, but they all share one characteristic: your interest rate can change over time.
Tracker mortgages follow the Bank of England base rate plus a set margin. For example, 'base rate + 0.75%' means if the base rate is 4.50%, you'd pay 5.25%. If the base rate drops to 4.00%, your rate drops to 4.75%.
Discount mortgages offer a set discount off the lender's Standard Variable Rate (SVR). The SVR can change at the lender's discretion, so your payments can go up or down.
Standard Variable Rate is the default rate you move to after your initial deal ends. SVRs are typically much higher than fixed or tracker rates, which is why most people remortgage before their deal expires.
Which Should You Choose in 2026?
With the Bank of England base rate currently at 4.50%, the decision depends on your view of where rates are heading and your personal circumstances.
Choose fixed if: you value payment certainty, you're on a tight budget where even small payment increases would be difficult, you believe rates might rise further, or you simply want peace of mind.
Choose variable/tracker if: you believe rates are likely to fall (which many economists currently predict), you have financial flexibility to absorb potential payment increases, you might want to overpay or move house without facing ERCs, or you want to benefit immediately from any base rate cuts.
Many of our clients are currently opting for shorter fixed terms (2 years) with the expectation that rates will be lower when they come to remortgage. However, if you prefer certainty, a 5-year fix still offers good value and protects you against any unexpected rate rises.
The best choice depends entirely on your personal situation. Speak to one of our advisers for tailored guidance.