One of the most significant decisions you’ll face when getting a mortgage is whether to choose a fixed-rate deal, offering stability and protection against fluctuating interest rates, or opt for a variable rate.
This guide will help you weigh the pros and cons of fixing your mortgage for 2 or 5 years, making it easier to decide in today’s turbulent market.
2 or 5-Year Fixed Mortgage 2025
A common question our mortgage advisors hear is, “Should I fix my mortgage for 2 or 5 years?”
In the current mortgage landscape, deciding between a 2-year or 5-year fixed-rate mortgage is crucial, especially with ongoing rate fluctuations. A fixed-rate mortgage secures your interest rate for a set period, shielding you from potential rate hikes.
Recent Trends in Mortgage Rates
As of March 18th 2025, the average rates for 2-year and 5-year fixed mortgages are quite similar:
- 2-Year Fixed: 4.84%
- 5-Year Fixed: 4.68%
With such close alignment, the best choice depends on your expectations for future rates and personal circumstances:
- 2-Year Fixed Rate: Ideal if you expect rates to fall, as it allows you to refinance sooner, potentially at a lower rate.
- 5-Year Fixed Rate: Provides long-term stability and may suit you better if rates are likely to rise, locking in a lower rate for longer.
Ultimately, the decision comes down to your financial goals and comfort with potential rate changes. Speaking to a mortgage advisor can help clarify which option aligns best with your needs.
Expert Recommendations
Given the current market, a 5-year fixed-rate mortgage could be advantageous due to its slightly lower rate and longer-term stability. However, the best choice varies for each borrower and should align with your personal circumstances and financial goals.
In summary, while both 2-year and 5-year fixed-rate mortgages have their merits, the current trend of a marginally lower 5-year rate suggests it may offer both cost savings and peace of mind.
“We believe that in 2025, the Bank of England will reduce interest rates by 0.25% to 4.25% in the third quarter and by another 0.25% to 4.00% in the fourth quarter. This makes it more important than ever to speak with an expert mortgage advisor to secure the right deal for you.” — Steve Roberts, YesCanDo Money CEO
Is a 2-Year or 5-Year Fixed Mortgage Better?
Both options offer stability and predictability, but your decision should depend on your personal circumstances, financial goals, and market outlook.
Quick Summary:
- 2-Year Fixed: Provides flexibility and potential access to lower rates sooner but requires remortgaging more frequently.
- 5-Year Fixed: Offers stability and rate protection but locks you in for longer, which could be costly if rates fall.
Should I Fix My Mortgage for 2 Years?
Three Pros of a 2-Year Fixed Mortgage:
- Remortgage Sooner: If rates drop, you can switch to a better deal after just two years.
- Potentially Lower Rates: 2-year fixed rates have historically been lower, though the gap with 5-year rates has narrowed.
- Shorter Commitment: Ideal if you’re planning to move or want flexibility to refinance sooner.
Considerations:
- Rate Risk: You’ll need to remortgage sooner, which could mean higher rates if the market changes.
- Affordability: While it offers flexibility, you must be prepared for potential rate increases when your deal ends.
Should I Fix My Mortgage for 5 Years?
Three Pros of a 5-Year Fixed Mortgage:
- Rate Protection: Shields you from future rate rises, offering long-term stability.
- Financial Certainty: Consistent payments, ideal if you expect changes like a job move or growing family.
- More Time to Save: Five years gives you longer to prepare for your next mortgage, avoiding frequent remortgaging stress.
Considerations:
- Long-Term Stability: Best if you plan to stay in your home for several years, ensuring stable payments.
- Potential Cost: While traditionally higher than 2-year deals, current 5-year rates are competitive and may offer better value.
- End-of-Term Planning: As your fixed term ends, consider options like switching to a Standard Variable Rate or remortgaging. An independent mortgage broker can help you find the best solution tailored to your situation.
“From what we’re hearing from our customers, a 2-year fix feels too short, while 5 years can feel like a long commitment. With interest rates so unpredictable, 3-year fixed and tracker mortgages are becoming more popular and will likely remain so in 2025.” — Steve Roberts, YesCanDo Money CEO
Best Fixed Interest Rates for 2 and 5-Year Mortgages
Knowing the current fixed-rate mortgage deals will help you make a better decision. Below is a live table with the best deals available for 2-year and 5-year terms.
Below is a graph showcasing the past 2 and 5 year fixed rates:
Current Best 2-Year Fixed Rate Mortgage
The below rates are the best 2-year fixed rates as of 18th March 2025. These rates are based on a £150,000 mortgage on a £250,000 property (60% loan to value). Please note that rates may vary and may no longer be available at the time of application.
| Lender | Initial Rate | Initial Payment | Reverting Rate | Reverting Payment | Total Fees | Type | APRC | Total Cost |
|---|---|---|---|---|---|---|---|---|
| HSBC | 3.99% | £790.93 | 6.74% | £991.03 | £999 | Fixed | 5.8% | £23,835 |
| Santander | 4.04% | £795.07 | 6.75% | £991.97 | £999 | Fixed | 5.8% | £27,444 |
| Nationwide | 4.04% | £795.07 | 7.24% | £1,032.62 | £1,014 | Fixed | 6.1% | £23,879 |
| Barclays | 4.12% | £801.73 | 6.49% | £973.52 | £1,034 | Fixed | 5.7% | £26,069 |
| NatWest | 4.12% | £801.73 | 7.49% | £1,051.18 | £1,525 | Fixed | 6.3% | £26,837 |
Current Best Mortgage Rates 3-Year Fixed
The below rates are the best 3-year fixed rates as of 18th March 2025. These rates are based on a £150,000 mortgage on a £250,000 property (60% loan to value). Please note that rates may vary and may no longer be available at the time of application.
| Lender | Initial Rate | Initial Payment | Reverting Rate | Reverting Payment | Total Fees | Type | APRC | Total Cost |
|---|---|---|---|---|---|---|---|---|
| HSBC | 3.99% | £790.93 | 6.74% | £991.03 | £999 | Fixed | 5.8% | £31,972 |
| Santander | 4.04% | £795.07 | 6.75% | £991.97 | £999 | Fixed | 5.8% | £34,014 |
| Nationwide | 4.04% | £795.07 | 7.24% | £1,032.62 | £1,014 | Fixed | 6.1% | £31,915 |
| Barclays | 4.12% | £801.73 | 6.49% | £973.52 | £1,034 | Fixed | 5.7% | £35,538 |
| NatWest | 4.12% | £801.73 | 7.49% | £1,051.18 | £1,525 | Fixed | 6.3% | £35,949 |
Current Best Mortgage Rates 5-Year Fixed
The below rates are the best 5-year fixed rates as of 18th March 2025. These rates are based on a £150,000 mortgage on a £250,000 property (60% loan to value). Please note that rates may vary and may no longer be available at the time of application.
| Lender | Initial Rate | Initial Payment | Reverting Rate | Reverting Payment | Total Fees | Type | APRC | Total Cost |
|---|---|---|---|---|---|---|---|---|
| HSBC | 3.99% | £790.93 | 6.74% | £991.03 | £999 | Fixed | 5.8% | £48,455 |
| Santander | 4.04% | £795.07 | 6.75% | £991.97 | £999 | Fixed | 5.8% | £50,236 |
| Nationwide | 4.04% | £795.07 | 7.24% | £1,032.62 | £1,014 | Fixed | 6.1% | £48,218 |
How Long Should You Fix Your UK Mortgage for in 2025?
When deciding how long to fix your mortgage, consider the following:
After the fixed-rate period ends, borrowers typically transition to the lender’s standard variable rate (SVR). At this point, they can either stay with the higher interest rate, opt for another fixed period, or explore remortgage options to find a more favourable deal.
Current Market Conditions:
The Bank of England’s base rate has been on a downward trend from its highest level in 16 years, making the decision on how long to fix your mortgage more crucial than ever. As of March 2025, average mortgage rates in the UK continue to ease. According to the latest data, the average 2-year fixed mortgage rate is 4.90%, while the average 5-year fixed rate is 4.74%. While rates are generally decreasing, short-term fluctuations are still possible. Opting for a shorter fixed term could provide the flexibility to remortgage at a lower rate if rates continue to fall.
Personal Circumstances:
- Duration of Stay: A longer fix might be better if this is your forever home. But if you expect to move in the next few years, a shorter fix might be better to avoid early repayment charges.
- Risk Tolerance: How comfortable are you with financial risk? If you want stability and predictability, a longer fix might be for you. A shorter fix could be better if you’re happy to take a chance on future rate drops.
Affordability:
Do you need affordability-enhancing products like Joint Borrower Sole Proprietor (JBSP) mortgages or guarantor mortgages to manage higher monthly payments?
“YesCanDo has been established for over 40 years and has seen many ups and downs in the mortgage market, so we advise you to consider your long-term plans and the economic climate when choosing between a two- or five-year fixed rate. With a newly elected Labour government saying we could be looking at austerity and a possible economic downturn, a longer-term fix might be a wiser choice. Locking in for an extended period during a falling-rate environment requires careful consideration to ensure it aligns with your financial goals. Additionally, choosing a variable-rate mortgage can offer lower initial costs but introduces uncertainty in monthly repayments due to fluctuating interest rates. Our mortgage advisors will help you make the right decision with you.”— Steve Roberts, YesCanDo Money CEO
Summary: How Long Should You Fix Your Mortgage?
- 2-Year Fixed: Flexibility to remortgage sooner but risk of higher rates at renewal.
- 5-Year Fixed: Stability and protection against rate rises won’t allow you to take advantage of rate drops without penalties.
- 3-Year Fixed: Balances flexibility and stability, offering the best of both worlds in a volatile market.
Ultimately, it all depends on your circumstances, plans, and the economic climate. Our mortgage advisors will help you determine your options and find the best mortgage.
What to Do When Your Fixed-Rate Mortgage Ends
If your fixed-rate mortgage ends in 2025, you have several options:
- Remortgage: Either with your current lender (product transfer) or a new mortgage lender to get a better deal.
- Standard Variable Rate (SVR): If you do nothing, you’ll likely move onto your mortgage lender’s SVR, which is higher than fixed rates.
- Other Options: If affordability is a concern, you might look into part-and-part or interest-only mortgages to manage payments. For those who are confident that interest rates will drop over the next couple of years, a tracker mortgage might be worth considering.
Pros and Cons of Fixing Your Mortgage
Understanding these pros and cons will help you decide which mortgage option aligns best with your financial goals and lifestyle needs.
One potential risk associated with variable-rate mortgages is that rising interest rates can lead to higher and more unpredictable repayments, especially in the current economic climate.
Pros:
- Protection Against Rate Rises: You lock in a rate, so your payments stay the same even if the market rates increase.
- Savings on Fees: Staying with the same mortgage for longer means fewer remortgaging fees.
- Stability During Life Changes: A fixed mortgage protects against financial uncertainty during significant life changes, such as having a family or changing jobs.
Cons:
- Higher Mortgage Payments: Fixed rates generally mean higher monthly payments than variable rates.
- Early Repayment Charges: Moving or paying off your mortgage early during the fixed term can cost you a lot.
- Missing Out on Rate Drops: If rates drop after you’ve fixed your rate, you could pay more than you need to.
Get in touch with our team if you have any questions and check out our other for further information on the different kinds of mortgages available.
FAQs
Is it better to get a shorter or longer fixed term on a mortgage?
The choice depends on your financial situation and future plans. Shorter terms offer lower rates and flexibility, while longer terms provide rate stability which helps in budgeting.
Who has the best 5 year fixed term mortgage rates UK?
It varies, but comparing rates from different lenders or consulting a mortgage broker can help identify the best 5-year fixed term mortgage rates in the UK.
Is it best to get a 2-year or 5-year fixed mortgage?
A 2-year fix offers lower rates and flexibility, ideal if rates might drop. A 5-year fix provides longer rate stability, beneficial in a rising rate environment.
Is a 2-year fixed mortgage a good idea?
A 2-year fixed mortgage can be a good idea if you anticipate better rates or a change in your financial situation in the near future, offering a blend of rate stability and flexibility.
Will mortgage rates go down in 2024 UK?
It's hard to predict with certainty. Factors like economic conditions and Bank of England policy will impact whether mortgage rates decrease in 2024 in the UK.
