Should You Lock Into A Five Year Deal? | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

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Derin Clark

Derin Clark

Online Reporter
Published: 26/01/2021
residential housing street

The difference between the average rate on a two and five year fixed mortgage deal fell last year to 0.27%, meaning that mortgage borrowers considering a five year deal will not pay a much higher rate than those locking into two year deals.

Research carried out by found that during 2020, the difference in average rates between a two and five year deal was 0.27%, which is down from 0.36% difference in 2019. In fact, last year saw the difference in rates fall to their lowest level since 2013, when again the difference was 0.27%. Today, the average rate on a five year fixed deal is just 0.17% more than a two year fixed deal, at 2.69% and 2.52% respectively.

Two year mortgage deals have tended to be more popular with mortgage borrowers, but the fall in the gap between five and two year fixed deals could push more borrowers to choose the long-term option. “Historically, two year fixed products have been popular with borrowers, however while the economy remains full of uncertainty, some may find themselves ultimately better off with a five year fixed rate mortgage,” explained Eleanor Williams, finance expert at “Although five year deals generally carry higher rates than their two-year equivalents – as borrowers are effectively purchasing the longer-term stability and protection from future interest rate increases these provide – with the gap between the two options currently so low, this may be an opportune time to secure the peace of mind a longer-term fixed rate can bring.

Should you choose a two or five year fixed deal?

Clearly, there are benefits to locking into a five year deal, especially during this period of economic uncertainty. But, for some borrowers, a five year fixed deal may not be the best option.

It is important to remember that although the gap between the average five and two year mortgage rate has fallen, the repayments on a two year deal are still cheaper than on a five year deal. For example, those looking for a moving home mortgage at a 75% loan-to-value (LTV) will find the lowest rate on a two year fixed deal is Clydesdale Bank’s 1.19% deal. Meanwhile, the lowest five year rate on a moving home deal at a 75% LTV is 1.55% from Halifax (a deal that requires a £250,000 minimum loan). If, for example, a borrower was looking to purchase a £300,000 property at a 75% LTV, so borrowing £225,000 on a mortgage that would be repaid over 25 years, the two year deal at 1.19% would result in £867.46 monthly repayments, while the five year deal at 1.55% would result in £905.15. This would mean the five year would be £37.69 more expensive per month, which would result in £452.28 more over the 12-month period. Borrowers can compare how much repayments will cost using our mortgage repayments calculator.

In addition to this, when looking at mortgage deals, borrowers should consider their current and future needs from the mortgage. For example, homeowners who think they may move house within five years would likely be better choosing a two year fixed deal to avoid paying an exit penalty. Alternatively, those who have applied for their mortgage with a high LTV, may want to choose a two year deal with the hope that when it comes to remortgaging their home they can do so at a lower LTV and, as a result, a more competitive mortgage rate.

For more information about whether a two of five year fixed deal is the right option, read our guide Should I get a two-year or five-year fixed mortgage?. If you are still unsure or want further advice, you could consider speaking to a mortgage broker, who will be able to talk you through the different mortgage products available and what would be the best option for your current and future plans.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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