Copy article

Are lenders widening margins on trackers?

ended 21. April 2026

A broker on Newspage has said that, with demand for trackers increasing due to the high cost of fixed rate mortgages, some lenders appear to be quietly widening their margins on selected tracker products. He says the result is that borrowers who think they're getting a better deal are actually handing more of that upside back to the lender. Keen to know if you're seeing this and, if so, whether it constitutes profiteering or is simply lenders managing risk and responding to demand, i.e.  fair enough? Any thoughts, whizz them across.

6 responses from the Newspage community

Copy all

Copy

Editor
Louis Mason
Content and Communications Director at Oportfolio Mortgages
We are seeing a bit of that, yes. Tracker demand has crept up as fixed rates have felt eye-wateringly expensive, and lenders aren’t daft, they price accordingly. Some of the margins on newer tracker products are a touch… “generous,” shall we say.
But I wouldn’t rush to call it profiteering. It’s more a case of lenders hedging their bets and managing pipeline risk in a volatile rate environment. When everyone piles into one corner of the market, pricing rarely gets cheaper out of kindness.
The irony is that borrowers are chasing flexibility and potential savings, but if the margin’s been padded, the “deal” can quietly lose its shine. It’s a bit like thinking you’ve found a bargain flight, only to discover the luggage costs more than the ticket.
Copy

Editor
Aaron Strutt
Product and Communications Director at Trinity Financial
Some of the tracker rate margins have gone up, but there are still some decent trackers to choose from, especially if you have a larger deposit. Skipton has just announced rate increases to its residential base rate trackers, although lenders like Halifax still have two-year tracker rates starting from 3.96%. Looking at the prices of fixed rates at the moment, many borrowers will think variable rates look like a good bet, especially if they do not expect the Bank of England base rate will increase any time soon, given the state of the UK economy and the current global turmoil.
Copy

Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
It’s opportunistic. Lenders know that borrowers are suffering with "fixing-phobia" right now. Lenders are pricing Trackers not just on the cost of money, but on the value of the flexibility they provide.
Copy

Editor
Sarah Fox-Clinch
Director at Fox Davidson
Increasing the margins on tracker rates is particularly frustrating as swap rates do not affect tracker pricing but affect fixed rate pricing. I can see why lenders are increasing the margins though. I think they are more comfortable with the majority of their clients being fixed into a product as this gives them a known 'churn rate' so they can predict how many people will be coming back to the product transfer & remortgage market at any particular time in the next few years. Many trackers do not have early repayment charges so having a large percentage of their mortgage book able to leave them at any time isn't what they want.
Copy

Editor
Craig Fish
Director at Lodestone Mortgages
We are starting to see lenders widen their margins on tracker products as demand for them increases. Some of that is understandable, lenders pricing for product flexibility and the additional risk that comes with a variable rate product. But some of it does look like pricing based on popularity, which is a different thing entirely. What concerns me more, though, is an inconsistency I am seeing with certain lenders. Some are offering ERC-free tracker mortgages to new customers, while existing customers choosing the same product are subject to early repayment charges. That is a difficult position to justify and borrowers should be aware that loyalty is not always rewarded in this market. Taking independent advice before committing to any product has never been more important.
Copy

Rohit Parmar-Mistry
Founder at Pattrn Data
If lenders are widening tracker margins while marketing them as the sensible escape route from expensive fixes, borrowers are right to ask harder questions. A tracker is meant to give you clearer exposure to the base rate. If margins quietly drift wider as demand rises, part of that benefit is simply being clawed back.

That does not automatically make it profiteering. Lenders price for funding costs, capital requirements, risk appetite and market positioning. But when many borrowers are being pushed towards trackers by unaffordable fixed rates, the line between risk pricing and opportunism gets thinner.

The practical point is that people should stop treating trackers as automatically cheaper just because the headline structure sounds simpler. The margin matters. The fee matters. The exit terms matter. If competition is weak and demand is strong, lenders will use the room they have. Borrowers need to read the detail, not the story they want to hear.