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Sam covers personal finance topics, from the best savings rates to the reasons mortgage lenders say no. He enjoys crunching the numbers to help consumers get ahead.
If your mortgage deal is coming to an end, should you fix for two years or lock in a rate for longer?
More borrowers are turning to five-year fixes for greater stability, according to Moneyfacts demand data.
But how much extra will you pay for that peace of mind? And could you save money by choosing a tracker instead?
Here, Which? compares the cost of different mortgage deals and explains what to consider before making your next move.
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In September, fixed rates shot up in response to rising energy costs. By early October, the average fixed rate was narrowly below 6% for both two and five-year fixed rates. The last time rates were this high was the autumn of 2023.
Rate increases have slowed in recent days, and some lenders have even started to tentatively drop rates again. However, these reductions are only minor. It is also not clear how long cuts will last.
If you're coming to the end of a two-year fixed deal, you're likely to find that today's rates are slightly higher than when you last took out your mortgage. The average two-year fixed rate was 5.4% in October 2024, compared with 5.96% currently.
Those coming off five-year fixed rates need to prepare for significantly higher rates. The average five-year fixed rate was 2.25% in July 2021; now, the average rate is 5.99%. For most mortgages, this jump will result in monthly repayments increasing by hundreds of pounds.
The graph shows how the average two and five-year fixed rates have fluctuated since the start of 2024.
To illustrate how the fixed deal changes the cost of a mortgage, we’ve calculated the estimated monthly repayments of the cheapest two-year, three-year and five-year fixed rates at three different loan-to-value (LTV) levels, based on a £250,000 mortgage over 25 years.
We've also included the monthly cost of the cheapest tracker deals, which currently offer the best deals, to highlight how the best fixed deals compare.
| Loan-to-value | Two-year tracker | Two-year fix | Three-year fix | Five-year fix |
|---|---|---|---|---|
| 60% | £1,327.89 | £1,455.65 | £1,468.77 | £1,468.77 |
| 75% | £1,344.57 | £1,470.23 | £1,479.01 | £1,471.69 |
| 90% | £1,408.09 | £1,509.94 | £1,521.81 | £1,495.17 |
Currently, trackers still offer the lowest monthly repayments. However, if you're considering a tracker, you need to prepare for your monthly repayments to rise over the next year, as forecasts predict multiple base rate increases.
If you have at least 40% equity in your home (an LTV of 60% or less), you'll see the biggest difference in monthly repayments between the cheapest fixed-rate deals. This gap is still quite narrow, though, at just £15 per month. Given how much mortgage rates have changed in recent years, you may decide that's a worthwhile price to pay for the certainty of fixing your rate for five years.
If your LTV is 75%, the cheapest two-year fixed deal costs just £1.46 less per month than the cheapest five-year fix. At 90% LTV, the cheapest five-year fix is actually a few pounds a month cheaper than the best two-year deal.
We found that three-year fixed deals were the most expensive at both higher LTVs we looked at. At 60% LTV, the cheapest three-year deals matched the best five-year rates but were more expensive than the cheapest two-year deals.
Here are six key factors to weigh up before choosing your next mortgage:
The deals you're eligible for depend largely on your loan-to-value (LTV) – the percentage of your property's value that you're borrowing.
If you've built up more equity in your home since taking out your current mortgage, you may qualify for a lower LTV band and cheaper rates.
Right now, leading two-year fixed rates range from around 4.8% to 5.5%. For five-year fixes, the most competitive deals sit between 4.9% and 5.5%.
Moneyfacts demand data, based on the most common deals consumers search for, shows that two-year fixes are currently most popula.
Some deals come with upfront fees of £1,500 or more – which means a low-rate deal could actually cost more overall than one with a slightly higher rate but no fee.
A mortgage broker can help you avoid these pitfalls. By weighing up rates, fees and incentives such as cashback, they can recommend the most suitable deal for your circumstances.
A shorter mortgage term gives you the flexibility to switch to a new deal sooner, potentially at a lower rate, but there’s always the risk that rates won’t fall, or could even rise.
A longer fix gives you certainty over your monthly payments but – if rates drop during your term – you could miss out on cheaper deals.
If you think you'll move home sooner, a shorter-term deal could be more suitable. This is because you'll likely face early repayment charges if you move home during your fixed term.
Most providers allow you to 'port' your mortgage to another property, but this isn't always cost-effective and can involve meeting specific criteria.
Tracker mortgages currently offer the lowest rates on the market. In fact, they're the only mortgage type with a rate starting with a three.
When we checked on 13 October, the best tracker mortgage for someone remortgaging with at least 40% equity in their home (an LTV of 60% or less) was around 0.9 percentage points cheaper than the best fixed-rate deal.
The trade-off is that your mortgage rate can go up as well as down, because it follows the Bank of England base rate. The latest forecasts predict that the base rate will rise in November and more hikes are likely in 2027.
Before choosing a tracker, think about whether you could still comfortably afford your mortgage if your monthly repayments increased.
If you're torn between the flexibility of a two-year fixed and the stability of a five-year deal, a three-year mortgage could offer a middle ground.
However, we found that three-year fixed rates are generally more expensive than the best two-year and five-year deals because there are far fewer of them. When we checked on 13 October, there were 824 three-year fixed deals available, compared with more than 3,000 two-year fixes.
That doesn't mean you should rule one out completely, but it's worth comparing the total cost against equivalent two-year and five-year deals before making your decision.
We've reviewed 21 lenders, investigating customer satisfaction and how their deals compare to the competition. Our review pages also feature providers' latest deals and comments from real mortgage customers.
Barclays, First Direct, Nationwide and NatWest are the reviews to check out first. All four are Which? Recommended Providers for mortgages. This means they demonstrated excellent customer satisfaction, consistently close to market-leading rates and top-quality customer service.
To see how all the providers fared in our analysis, head to best mortgage lenders.
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