The Bank of England has cut rates three times since their 5.25% peak, bringing the Bank Rate to 3.75%. Markets are pricing in two further cuts in 2026, suggesting a Bank Rate of around 3.25% by year end. For the 1.5 million homeowners coming off fixed deals in 2026, this creates a genuine dilemma: fix now and lock in certainty, or track rates in the hope of benefiting from further cuts?
The Case for Fixing Now
Two-year fixed rates have fallen to around 4.4% — significantly below the 6.1% peak of late 2023. For homeowners who were paying pre-crisis rates of 1.5-2%, any current fixed deal still represents a payment shock. But the direction of travel is better.
Locking in at 4.4% provides certainty for two years. If rates fall further, you will not benefit — but you will not be exposed to any upward surprises either. Given the genuine uncertainty about the global economic environment, that certainty has value.
The Case for Tracking
A tracker mortgage set at Bank Rate plus a margin of, say, 0.75% would currently cost 4.5% — slightly above the best fixed deals. But each Bank Rate cut of 0.25% would immediately reduce your monthly payments.
If two further cuts come through as markets expect, a tracker would fall to around 4.0% by the end of the year — potentially cheaper than the best current fixed deals.
What Most Borrowers Should Probably Do
For most borrowers, the psychological value of payment certainty outweighs the potential financial benefit of tracking. Fix for two years rather than five — the two-year rates are currently better and you retain the flexibility to remortgage when your fixed deal ends.
If your fixed rate is ending in the next six months, you can typically lock in a new deal up to six months early without switching immediately. This allows you to secure today's rates while giving yourself time to see if they improve further.
