Uptake is rising and the base rate is steady, but most borrowers have never been offered a tracker as a remortgage option
Brokers are failing to discuss tracker mortgages with clients who could benefit from them, even as uptake at some firms has risen by around 80% and the Monetary Policy Committee voted 7–2 to hold Bank Rate at 3.75% for the fourth consecutive meeting in June.
Paul Hampton (pictured top), owner and mortgage consultant at Approved Mortgage Solutions, told Mortgage Introducer the rate environment gives advisers a clear and defensible basis for putting trackers on the table, with the case for those products stronger than many in the industry are acknowledging.
"The Bank of England's not moving anywhere," he said. "If you look at the votes, the last vote was 7–2 in favour of keeping it the same, so a tracker rate with no early repayment charges is a very safe option."
A holding position, not a gamble
Hampton framed the tracker as a practical bridge for borrowers caught between where rates have been and where they might go. For a client coming off a five-year fix at around 1.99%, committing to a new deal at current levels can feel like a significant leap, whether that is a five-year fix or a two-year alternative.
"If somebody is coming off a five-year fix at 1.99% and they don't want to commit to another one at 4.89%, then you'll get a tracker rate which is probably comparable – about 4.7%, 4.89% – with no fees but no early repayment charges," Hampton said. "It's using it like a holding position. You put your client on a tracker rate. Once you're confident and they're confident interest rates are stable, put them on a fixed rate."
Most tracker rates carry either no early repayment charge or a 1% penalty, meaning clients can switch to a fixed rate quickly and cheaply when they are ready. That flexibility, Hampton said, is precisely what makes the product well-suited to the current environment, and it is already showing up in his own numbers.
Tracker volumes at Approved Mortgage Solutions have risen by approximately 80%, a shift Hampton attributed to the firm's longstanding practice of presenting tracker options alongside fixed rates. He is not alone, with tracker demand rising across the UK remortgage market as more advisers reassess their default approach.
Why are brokers not discussing tracker mortgages?
Hampton said tracker mortgages are not being discussed as they should be, with many advisers defaulting to fixed rates without exploring alternatives.
"Brokers are not discussing tracker rates as they should," he said. "They're not explaining the pros and cons to a client. They're not even being considered, and that’s right across the board. I've seen our brokers just talk about fixed rates, and I said, ‘Well, have you considered other things, so we'll know whether the client's cautious?’. The base rate's not going anywhere, and if you've got no early repayment charges, a cautious person can go under a fix when they want to. If your client doesn't want to commit to something now, you don't have to do it straight away. You can do a tracker rate for six months and then revisit it.”
Many borrowers, he added, have simply never encountered a tracker product after 15 years of fixed-rate dominance, and react to the concept accordingly.
"Most clients don't even know that tracker rates exist. They've had fixed rates for the last 15 years. So again, when you're introducing tracker rates, they're like, ‘Oh, well, it's the devil spawn’. No, it's not."
The case for clearer consumer education
Hampton pointed to a gap in broker documentation, referencing the effect-of-a-1%-increase disclosure that used to appear on Key Facts Illustrations (KFIs) but has since been removed. The omission, he argued, makes it harder for brokers who have rarely or never recommended a tracker to explain the product's risks clearly, and leaves clients without a concrete reference point for what a rate rise would mean in practice.
"One of the things that used to be on the old KFIs, which are not on the current documents, is the effect of a 1% increase," he said. "From a compliance point of view, if you were doing a tracker rate and you could say to your client, ‘This is the effect of a 1% increase in the base rate’, then you're giving them information."
His suggestion is to reinstate that disclosure as standard, paired with broader education about how base rate movements translate into monthly payments. "Typically, the base rate will go by a quarter of a percent, not 1%," he said. "I think more education from a consumer, from a broker point of view as to what trackers are, and I think a step back to what a 1% rise would mean on your documents would make it easier for brokers to sell who've never sold a tracker rate, and for customers to understand who've never had a tracker rate."
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