Should You Lock Into A Five Year Mortgage 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.

ARCHIVED ARTICLE This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Derin Clark

Derin Clark

Online Reporter
Published: 07/12/2020

Although two year fixed rate mortgage deals still offer a cheaper rate than five year fixed rate deals, the latest data shows that the gap between the average two and five year fixed rates is at its lowest point since June 2013.

Data, due to be released in the Moneyfacts UK Mortgage Trends Treasury Report, shows that the current gap between the cost of the average two and a five year fixed rate mortgage is just 0.2%, with the average two year fixed deal standing at 2.49% and the average five year fixed deal at 2.69% on the 1st December 2020.

In fact, year-on-year, although the average two year fixed rate has increased, the average five year fixed rate has fallen. On the 1st December 2019 the average two year fixed mortgage rate was 2.44%, increasing to 2.49% a year later. Meanwhile, the average five year fixed mortgage rate was 2.74% on the 1st December 2019 and fell to 2.69% on the 1st December 2020.


Average two and five year fixed mortgage rates
  1 December 2019 1 March 2020 1 June 2020 1 July 2020 1 November 2020 1 December 2020
Average two-year fixed rate (all LTVs) 2.44% 2.43% 2.02% 1.99% 2.43% 2.49%
Average five-year fixed rate (all LTVs) 2.74% 2.74% 2.26% 2.25% 2.70% 2.69%


“The difference between the overall average two-year fixed rate and average five-year fixed rate is now 0.20% this month, which is the smallest this gap has been since June 2013, when the two rates were just 0.17% apart,” explained Eleanor Williams, finance expert at “This may be positive news for those considering their options, as those opting for five-year fixed rates would not only benefit from longer stability in their monthly mortgage payments, but would also be protected for the term of their deal from any future interest rate rises.”

Is a five year deal right for you?

Although locking into a five year deal could be a good option for homeowners who know they want to stay in their current property for a minimum of five years and who want the security of knowing what their monthly repayments will be during that period, this may not be the right option for everyone.

First-time buyers purchasing a home with a small deposit of 15% or less, meaning that they have an loan-to-value (LTV) of 85% or higher, might want to lock into a shorter two-year deal as they may get a better rate when they look to remortgage after the two years have ended and they have lowered their LTV. Alternatively, those who think they may want to move house within the five year period, could be better off choosing a shorter term so they do not have to risk paying expensive exit fees to get a new mortgage on their new home.

Clearly, when considering what mortgage deal is best the rate is not the only factor to take into consideration. As such, borrowers unsure about which mortgage deal is best for them should consider speaking to a mortgage broker who will be able to discuss their personal circumstances and suggest the best options available.


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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