Nearly half (49%) of borrowers comparing mortgage deals in November were considering two-year fixed rate options, new data from Moneyfacts shows.
The shorter-term deal was favoured by first-time buyers (70%) and remortgage customers (62%), while second-time buyers showed more variation, with 45% leaning towards five-year or longer terms.
Despite higher overall mortgage rates, 7% of borrowers were also exploring 10-year fixed deals.
Adam French, head of mews at Moneyfactscompare, said: “It’s not surprising that so many borrowers are considering two-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 five-year deal, which was priced at 5.25%. However, two-year deals have since become cheaper, with average rates now at 4.86% and the average five-year deal sat at 4.91%, both dipping below 5% earlier this year for the first time since the mini budget in September 2022.
"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."
Mary-Lou Press, president of NAEA Propertymark, commented: “Today’s figures indicate that consumer confidence is still being shaped by uncertainty around the direction of interest rates. The strong shift towards two-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.
“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.”
