Early 2026 presents buyers with crucial mortgage decisions: lock into fixed rates providing payment certainty, opt for tracker mortgages following Bank of England base rate movements, or delay purchases hoping for improved conditions. Understanding these options' implications helps you choose approaches matching your circumstances and risk tolerance.

Fixed rate mortgages provide certainty

Fixed rate mortgages dominate current markets, offering payment stability regardless of interest rate fluctuations. Two and five-year fixes represent most popular choices, though longer ten-year options appeal to buyers prioritizing extended certainty.

Fixed rates suit buyers who value predictable budgeting over potential savings from rate decreases. If knowing your exact monthly payment throughout the fixed period provides peace of mind worth paying for, fixes represent sensible choices even if rates subsequently fall.

Consider your likely ownership duration when selecting fix lengths. Buyers confident they'll stay beyond five years might favour longer fixes avoiding remortgage hassles, whilst those anticipating possible moves within three years might prefer shorter terms reducing early repayment charge risks.

Current two-year fixes typically offer slightly higher rates than five-year equivalents, reflecting lender expectations about medium-term rate movements. This unusual pricing suggests lenders anticipate stable or declining rates over five years, making longer fixes potentially better value.

Tracker mortgages offer flexibility and risk

Tracker mortgages follow Bank of England base rate movements, typically charging base rate plus fixed percentages like 1% or 1.5%. When base rates fall, your payments decrease immediately. When rates rise, payments increase correspondingly.

Trackers suit buyers comfortable with payment uncertainty and confident rates will decrease or remain stable. If you have financial flexibility accommodating potential payment increases, trackers offer opportunities to benefit from rate reductions without waiting for fixed terms to expire.

However, tracker risks are substantial if rates increase unexpectedly. Calculate maximum payments you could afford if rates rose 2-3%, ensuring tracker selection won't create financial distress if worst-case scenarios materialize.

Some trackers include collars preventing rates falling below certain levels even if base rates decrease substantially. Understand these limitations before choosing trackers specifically for downside protection.

Discount and variable rate alternatives

Discount mortgages offer reductions from lenders' standard variable rates for specific periods. Unlike trackers tied to Bank of England rates, these follow lender-set rates that can change at their discretion.

Standard variable rates themselves, whilst rarely chosen deliberately, represent what mortgages revert to after fixed or tracker periods expire. These typically cost more than competitive products, making remortgaging before reversion advisable.

The case for waiting

Some buyers consider delaying purchases hoping mortgage rates improve substantially. This strategy carries significant risks and opportunity costs.

Whilst rates might decrease, they equally might increase or remain stable. Meanwhile, you continue paying rent without building equity, potentially watching property prices appreciate beyond your reach. Suitable properties might sell whilst you wait, and life circumstances might change making delays regrettable.

Waiting makes sense only if you're genuinely indifferent about homeownership timing and can accommodate continued renting without frustration. For buyers eager to purchase, waiting for perfect rate conditions often proves counterproductive.

Hybrid approaches

Consider split mortgages combining fixed and variable elements, though fewer lenders offer these. Fixing portions of borrowing whilst tracking others balances certainty against flexibility, though administrative complexity increases.

Offset mortgages linking savings to mortgage balances suit buyers with substantial savings. Interest calculates only on mortgage balance minus linked savings, reducing costs whilst maintaining savings access.

Making your decision

Your choice depends on personal circumstances rather than universal right answers. Risk-averse buyers prioritizing certainty favour fixes. Those comfortable with uncertainty and believing rates will fall might choose trackers. Buyers unable to proceed immediately might wait, though should question whether delays genuinely serve their interests.

Consider factors beyond pure rate calculations including job security, income stability, other financial obligations, and how payment uncertainty affects your stress levels and financial planning.

Consult mortgage brokers who can model different scenarios showing how various options affect your specific situation over time. Their expertise helps you understand trade-offs between certainty costs and flexibility benefits.

Contact us to choose your optimal mortgage approach