Two-year fixed rate mortgages are the most popular option for borrowers searching for new deals, data from Moneyfacts Analyser has revealed.
It found almost half of people (48.7%) looking for initial fixed rate mortgages were considering a two-year deal compared to 27% looking for a five-year fixed rate.
During the period analysed – the 30 days to 28 August – as many as 92% of consumers were looking to fix their rate rather than opt for a tracker or variable deal. A tiny proportion were looking for one-year fixed rates and as many as 6% were considering fixing their rate for 10 years.
Weighing up whether to fix your mortgage rate for two or five years has long been a conundrum for borrowers. Five-year rates provide certainty for a longer time period and delay the hassle of remortgaging. But, if rates were to fall during this time, borrowers would not benefit.
Two-year rates meanwhile offer more flexibility and, in recent weeks, they have also become cheaper than the five-year option for the first time in three years.
According to Moneyfacts the average two-year fixed rate today (Friday 29 August) is 4.96% whilst the typical five-year fixed rate is 5%.
The analysis showed two-year fixed rates were most popular with remortgaging borrowers.
For those looking at variable rate mortgages, the two-year option was most popular for initial rates, Moneyfacts revealed.
A Moneyfactscompare.co.uk spokesperson said: “It comes as little surprise that many borrowers are interested in a two-year term given the general expectation for rates to continue steadily falling over the short-to-medium term.
“The Moneyfacts average two-year fixed mortgage rate has fallen from 5.2% at the start of 2025 to 4.98% now, recently dipping below 5% for the first time since the aftermath of the so-called mini-Budget in September 2022.
“However, given that inflation is forecast to sit above the Bank of England’s 2% target until at least 2027 and that the cost of government borrowing has been climbing, there are still plenty of economic challenges on the horizon which may influence mortgage rates and borrower behaviour in the future.”
