Hi TRS
There are a few reasons.
1) From a business point of view, many people will want to move, so they will sell their homes and pay off their trackers early anyway. Why give discounts to people to whom you don't need to give discounts.
2) Our accounting rules are strange. They treat a performing loan of €100k at 4.5% SVR the same as a performing loan of €100k on tracker of 1%. The cash flows are very different but they are both valued at €100k in the books. If they gave you a discount of €20k, they would have to show an immediate loss of €20k. If they did that for all their loans, they would require more capital.