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To track or to fix? The Big Broker Debate

by | Nov 24, 2022

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Should people opt for the security of a more expensive fixed rate or a cheaper tracker / variable rate mortgage? Free PR platform, Newspage, has shared the views of brokers with IFA Magazine.

Craig Fish, Founder & Director at Lodestone Mortgages & Protection:“I am not recommending fixed rates to anyone at present, unless they are completely risk averse, as I think there is still quite a bit of room for downwards momentum on these. Looking at current SWAP rates, lenders have still got quite a bit of margin built into these at the moment, and this can be trimmed further. I am expecting and hoping that fixed rates drop below 4% at some point in the New Year as lenders look to eat into their annual lending targets early. At this point I will likely start recommending fixed rates again, but until then it’s tracker and discounted variable rates, without early repayment charges, all the way, once we have fully assessed and tailored our advice to the client’s needs.”

Lea Karasavvas, Managing Director at Prolific Mortgage Finance:“While SWAP rates have been reducing in the past few weeks, and we are starting to see this filter through to the fixed rate products in the market, we are very much of the opinion that the best value is within trackers right now. Lenders are slowly starting to build an appetite for new business, and this should drive down the cost of borrowing in terms of fixed availability in the not-too-distant future. But for those that need to move now or are coming off their fixed rates in the near future, we are arguably seeing better value in trackers as the price differential is so high between the two. We do expect fixed rates to drop further, especially as we go into 2023, but the added bonus of tracker products is that the majority of them carry no penalty for early redemption, meaning borrows can enjoy the lower tracker margins now and then look to exploit the lower fixed costs that are expected in the future. This is a riskier approach and involves potentially two arrangement fees, but as we are saying to clients, the margin of difference is too high to ignore and, in our opinion, fixed cost borrowing still has a bit of downward movement in it, which we expect to see early part of 2023.”

Elliot Cotterell, Director at Windsor Hill Mortgages: “In the current market, it is certainly worth considering a tracker rate as this could well be advantageous, but it very much depends on the borrower’s financial situation and appetite for risk. Currently, fixed rates could be sat as much as 1.68% above a tracker using Skipton Building Society as an example. Even with a likely further increase to the base rate in December, this is still likely to be a lower payable rate of interest than the fixed rate. However, it is quite possible that we could see further reductions to fixed rates over the coming months despite more base rate increases. This is due to the margin initially set and also growing competition between lenders. When looking at variable versus fixed as an option, it’s important to consider the risk of property price reductions. If a borrower’s LTV is high and they have little cash available to inject to reduce the resulting loan to value, then this could put them in quite a precarious position. It is always best to speak with an independent adviser so that they can run through hypothetical scenarios for you when considering possible market changes. Of course, none of us have a crystal ball that tells us what the future holds for the market but we can certainly assess the possible options and therefore plan accordingly. At the end of the day it is down to risk appetite for the individual but in my opinion the prospect of a tracker in this market is certainly something that should be considered.”


Hannah Bashford, Director at Model Financial Solutions Limited: “We’re seeing lots of people enquiring about tracker rates at present and they are particularly useful for clients that have some room within their budget for changes. Many people are interested in the fact that these rates have low or no early repayment charges, so in the future if they are worried about the amount they are increasing by, they can switch to a fixed rate at that point. Tracker rates are not for everyone and if a client is risk adverse and wants some certainty, these are not for them.”

Aaron Forster, Director at Create Finance: “As a mortgage broker, it’s more important than ever to discuss all the options with clients, including variable rate products. Over the years, brokers have been very channelled towards fixed rate deals. As variable rate products are significantly lower at present, they may be a good option for some clients. As long as borrowers understand the risks associated with a variable rate deal and understand that their payment could increase, as well as decrease, then at present it could save them money by going on a tracker deal. Even if the base rate were to increase by 2% there are many tracker deals that would still be competitive compared to fixed rate deals so rates would need to go up a long way before they would be at a loss.”

Michael Bennison, Partner at Bennison Brown: “Although lenders are slowly starting to reduce their fixed rates, they are still some way above the tracker rates available, which is making tracker products attractive to a number of borrowers. But borrowers need to consider their own circumstances, financial situations and appetite for risk. While a tracker offers a lower rate at the moment, this could soon change depending on how much and how quickly the Bank of England base rate increases. If the base rate does peak and then starts to fall, a tracker will allow clients to take advantage of falling rates quicker than if they are stuck on a fixed rate. We would always recommend a client receives advice from a good whole of market mortgage broker.”


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