Nearly half of mortgage customers were searching for 2-year fixed-rate deals last month as expectations of further rate cuts drove demand for shorter terms, according to new data from Moneyfactscompare.co.uk.
Some 49% of consumers comparing mortgages on the site in November opted for 2-year fixes, despite average pricing on the products remaining above pre-2022 levels.
Demand was strongest among first-time buyers, 70% of whom favoured the shorter term, and among remortgagers, at 62%. Second-time buyers were more evenly split, with 45% looking at five-year or longer terms.
Moneyfacts data shows the average 2-year fixed mortgage rate has fallen from 5.48% at the start of 2025 to 4.86% as of 3 December.
MARKET TURMOIL
The typical 5-year deal now stands at 4.91%. Both products dipped below 5% earlier this year for the first time since the market turmoil that followed the September 2022 mini-budget.
Longer fixes remain a minority choice, though 7% of all borrowers were exploring 10-year deals, suggesting some appetite for locking in long-term certainty despite higher rates.
Second-time buyers were the most likely to consider these products, with 12% comparing decade-long terms.
NO SURPRISE
Adam French, Head of News at Moneyfactscompare.co.uk, says: “It’s not surprising that so many borrowers are considering 2-year deals, given expectations for rates to continue falling in the short to medium term.
At the beginning of the year, the average two-year fixed mortgage rate was 5.48%, higher than the typical 5-year deal, which was priced at 5.25%.
“However, 2-year deals have since become cheaper, with average rates now at 4.86% and the average 5-year deal sat at 4.91%, both dipping below 5% earlier this year for the first time since the mini budget in September 2022.”
STABILITY AND PREDICTABILITY
He adds: “Despite this, second-time buyers appear to be prioritising stability, predictability, and protection from potential rate volatility over cheaper rates.
“They seem to be more concerned with securing long-term peace of mind, especially if they have higher levels of borrowing and want to shield themselves from unexpected rate hikes.”
KEEPING OPTIONS OPEN
Mary-Lou Press, President of NAEA Propertymark (National Association of Estate Agents), says: “Today’s figures indicate that consumer confidence is still being shaped by uncertainty around the direction of interest rates.
“The strong shift towards 2-year fixed products reflects a desire among many borrowers, particularly first-time buyers and those remortgaging, to keep their options open should rates continue to ease next year.”
LONGER-TERM STABILITY
She adds: “While short-term fixes are attractive in the current climate, it’s notable that a significant share of second-time buyers are opting for longer-term stability.
“This aligns with what our member agents are hearing on the ground: homeowners with larger loans or growing families are prioritising predictability in their monthly payments, even if that means accepting a slightly higher rate.
“Ultimately, borrowers are trying to strike the right balance between flexibility and security. With pricing between two and five-year deals now closer than earlier in the year, professional advice is more important than ever.”
