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The average rates on two-year and five-year fixed mortgages are now almost identical, with just 0.01 percentage points between them, according to Moneyfacts data.
If you're choosing a mortgage deal, whether you're buying a home or coming to the end of your current fix, this narrow gap could make your decision less straightforward.
Here, Which? looks at what’s driving the narrowing gap, whether conflict in the Middle East could push rates back up, and five key things to consider before choosing your mortgage term.
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The average five-year fixed mortgage rate is 5.11%, just 0.01 percentage points higher than the two-year average of 5.1%, according to Moneyfacts.
It's unusual to see the gap between these deals so small. Typically, five-year fixes cost more when interest rates are low, as borrowers pay a premium to lock in a cheaper rate for longer.
When rates are high, two-year deals often become more expensive, as borrowers are effectively paying more for the flexibility to switch deals sooner if rates fall.
According to David Hollingworth from L&C Mortgages, markets are already factoring in future base rate cuts, which has brought pricing across both terms closer together.
He said: 'Additional base rate cuts are already priced into fixed rates, but the near parity in pricing of two-year and five-year deals suggests that markets think those reductions will bring us toward the end of the rate-cutting cycle before rates bottom out.
'The fact that the longer-term outlook for interest rates is seen as being pretty benign is resulting in there being nothing between rates.'
Global events can influence mortgage rates by shifting expectations around inflation and interest rates.
Hollingworth said: 'So far there hasn’t been a big shift in market rates, but higher oil prices will result in higher rates of inflation, which could potentially put the brakes on rate cuts.
'At the same time, there will be concern that weak economic growth requires a lower interest rate environment. At the moment, the Bank is holding its message that rate cuts are likely to be steady, but with the news changing each day it’s so difficult to second-guess what will happen.'
If you’re weighing up a two, three or five-year fixed mortgage, the monthly repayments are likely to be very similar, especially if you qualify for one of the top deals.
To illustrate this, we’ve calculated the estimated monthly costs of the cheapest two-year, three-year and five-year fixed rates at four different loan-to-value (LTV) levels, based on a £250,000 mortgage over 25 years.
| Loan-to-value | Monthly payment (two-year fix) | Monthly payment (three-year fix) | Monthly payment (five-year fix) |
|---|---|---|---|
| 60% | £1,297.61 | £1,303.08 | £1,312.70 |
| 75% | £1,322.35 | £1,327.89 | £1,327.89 |
| 85% | £1,350.15 | £1,352.95 | £1,355.75 |
| 90% | £1,374.02 | £1,378.25 | £1,378.25 |
In most cases, the difference in repayments between the term lengths is minimal. Only at 60% LTV is the gap more than £10 a month.
That means you can focus on which deal best suits your plans — whether that’s locking in for longer, or keeping your options open in case rates fall — without worrying that one option will cost far more than another each month.
With two, three and five-year fixes offering similar monthly repayments, the right choice depends on your circumstances, not just the rate. Here are five key factors to weigh up:
Average rates give a sense of market trends, but the best deal for you will depend on your LTV ratio.
Right now, leading two-year fixed rates range from around 3.8% to 5%. For five-year fixes, the most competitive deals sit between 3.9% and 4.9%.
Moneyfacts data shows two-year fixes remain the most popular choice among borrowers
Some deals come with upfront fees of £1,000 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.
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. These products have become more popular in 2025, with more than 800 now available – up from 539 in January.
At the time of writing, 10 three-year fixes offer sub-4% rates, with lenders including MPowered mortgages, Santander, Barclays and Nationwide.
However, the best rates are typically reserved for borrowers with a 60% or 65% LTV. If you're borrowing at 90% LTV, the leading rates sit just above 4.5%.
