Homeowners reaching the end of their mortgage deal are being encouraged to explore a lesser-known alternative that could offer them some breathing room, as the Iran conflict keeps markets unsettled and rates unpredictable. The war has pushed mortgage costs progressively higher since it began on February 28, with lenders sharply increasing rates and withdrawing deals as energy prices surge and inflation fears mount.

This has left countless borrowers facing a difficult decision – whether to lock in now at elevated rates, or take a chance on waiting. However, there may well be a third option.

Rather than moving straight into a fixed deal, some brokers suggest switching to a tracker mortgage could buy precious time. Tracker deals follow the Bank of England base rate, but crucially, many come with little or no Early Repayment Charges (ERCs).

This means borrowers can switch to a fixed rate at any point – if and when the market stabilises. In straightforward terms, it’s a “wait and see” strategy in a turbulent market.

Co-operative Bank currently offers a 4.34% tracker at 60% LTV and 4.64% at 70% LTV, both featuring no ERCs. Barclays follows closely at 4.75% (70% LTV), also with no ERC. The best fixed rates, by contrast, are currently priced at more than 5% across the board.

Justin Moy, MD at Chelmsford-based EHF Mortgages, said this approach was becoming increasingly pertinent.

He added: “This is more about the experienced broker helping borrowers with a short-term solution, as most borrowers will not be aware of this approach. Many lenders have tracker options that have little or no Early Repayment Charges, so the ability to switch to a fixed deal at a much later date could be a good option, but this is all subject to individual circumstances.”

The stakes are considerable. The Iran conflict has pushed up oil prices, fuelling inflation and reducing the likelihood of interest rate cuts.

Some specialists are cautioning that rates could remain elevated for longer or even climb further. That uncertainty is precisely why flexibility is so important – but Moy warned borrowers against being dazzled by attractive headline rates.

He said: “You also have to watch the product fees, as getting the cheapest trackers may incur a product fee, and you’ll end up paying another one if you also want the cheapest fixed deals.”

The strategy could prove particularly beneficial for those with larger mortgages, where even modest rate shifts can translate into hundreds of pounds each month.

Moy added: “It is a way forward for those with larger mortgages in particular and is worth looking at.”

Darryl Dhoffer, founder at Bedford-based The Mortgage Geezer, said: “With mortgage rates climbing following the conflict in Iran, savvy borrowers are dodging long-term locks in hopes of a future dip.”

Martin Rayner, director at Compton Financial Services, said locking in a high fixed rate now could be a mistake with so much uncertainty.

He added: “Some borrowers are using trackers as a short-term strategy, planning to switch to a fixed rate if rates fall. This can work well, particularly with a no Early Repayment Charge deal, as it allows you to move without penalty.

“The downside is you remain exposed to further increases. While the lowest tracker rates often have fees of around £999, if used short-term (less than 6 months), a no-fee option is often more cost-effective, especially below £500,000.”

Dariusz Karpowicz, director at Doncaster-based Albion Financial Advice, said there was a lack of knowledge about tracker mortgages.

He added: “Most first-time buyers have never even heard of tracker mortgages, which is a shame because right now they could be a genuinely useful short-term play. With rates shifting fast off the back of geopolitical tension, a tracker with no Early Repayment Charges lets you sit tight on a lower rate and switch to a fixed deal once the dust settles.

“The catch? You carry the risk if rates climb further, and watch those product fees; paying one now and another when you fix could eat into your savings. Personalised advice from a good broker is everything here. Your circumstances dictate the strategy, not the headlines.”

With global tensions continuing to unsettle markets, flexibility could prove every bit as valuable as the rate itself.