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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.
Two-year fixed-rate mortgages are the most popular choice among borrowers, but are they always the best option?
Mortgage rates have been unpredictable in recent months. So is it worth paying a little more each month to lock in a longer fixed deal, or should you consider tracker mortgages, which currently offer some of the lowest rates?
Here, Which? explains what's happening to mortgage rates, how the length of your deal affects your monthly repayments, and the key things to consider before choosing your next mortgage.
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In 2025, fixed mortgage rates broadly fell as many experts had expected. The cheapest deals dropped from just over 4% to just under 3.5%, helped by four Bank of England base rate cuts.
A similar trend had been expected in 2026, with further base rate cuts forecast. However, conflict in the Middle East changed expectations.
In March, the cheapest fixed rates rose by around one percentage point. For someone borrowing £250,000 over 25 years, an increase from 4% to 5% would add £141.89 to their monthly repayments.
Since then, tracker mortgages have generally offered lower rates than fixed deals.
Since April, rates have fallen. In the last week of June, major lenders such as Barclays, HSBC, Nationwide Building Society and Skipton Building Society all cut fixed rates. Despite this, the best deals are still more expensive than those in February.
If you're coming to the end of a two-year fixed deal, you may find that today's rates are slightly lower than when you first took out your mortgage. The average two-year fixed rate was 5.95% in July 2024, compared with 5.52% on 1 July this year.
However, those coming off five-year fixed rates need to prepare for significantly higher rates. The average five-year fixed rate was 2.78% in July 2021. Now the average rate is 5.52%.
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% | £1,314.08 | £1,345.96 | £1,381.08 | £1,362.76 |
| 75% | £1,327.89 | £1,374.02 | £1,389.58 | £1,381.08 |
| 90% | £1,395.26 | £1,409.52 | £1,451.30 | £1,406.66 |
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 deals. We found that the gap between the best two-year and five-year fixed rates was around £17 a 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 £7.06 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 every LTV we looked at. One reason for this is that there are far fewer of them. When we checked on 30 June, there were 715 three-year fixed deals available, compared with more than 2,500 two-year fixes.
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 4.2% to 5.05%. For five-year fixes, the most competitive deals sit between 4.3% and 5.55%.
Moneyfacts demand data, based on the most common deals consumers search for, shows that two-year fixes are most popular currently.
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.
Tracker mortgages currently offer some of the lowest rates on the market. In fact, they're the only mortgage deals where the cheapest rates start with a three.
When we checked on 1 July, the best tracker mortgage for someone remortgaging with at least 40% equity in their home (an LTV of 60% or less) was around 0.4 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. While most forecasters expect the base rate to fall or stay the same over the rest of the year, unexpected events can quickly change the outlook.
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 30 June, there were 715 three-year fixed deals available, compared with more than 2,500 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
