Two-Year or Five-Year Fix? How to Choose When Rates Are Near 6%
2 years or 5? 🤔 Read this before you fix
TL;DR
In early October, average two-year and five-year fixed rates were almost level, at around 6%.
When the rates are that close, the decision depends on your plans, not just the headline rate.
Two years gives you flexibility sooner. Five years gives you certainty for longer.
Watch the small print: early repayment charges, fees and whether you can take the deal with you if you move.
There’s no right answer for everyone. The right one depends on your life over the next five years.
“Should I fix for two years or five?”
It’s one of the questions we get asked most. And right now, with rates where they are, it’s a fair one.
On 5 October, the average five-year fix was 6.00% and the average two-year fix was 5.98%, according to Moneyfacts. Those are averages across the whole market, and rates change all the time. But they do tell you something useful: the rate alone isn’t going to make this decision for you.
So here’s what will…
The short version
A two-year fix gives you a set rate and set payments for two years. Then you’ll need a new deal.
A five-year fix does the same thing for five years.
Neither is better on its own. Each one suits a different kind of next five years.
What a two-year fix gets you
Flexibility sooner. If your life might change soon, like a move, a new job, a growing family or a split, a shorter deal usually means smaller early repayment charges. That makes it easier to change things without paying to leave.
A chance to rethink in two years. If rates come down, you can look again sooner. If they go up, you’ll be looking again sooner too. Nobody knows which way they’ll go, and anyone who tells you they do is guessing.
The catch: more switching. Every new deal can come with its own lender fees, paperwork and a fresh round of checks on your income and credit.
What a five-year fix gets you
Certainty. You know exactly what’s leaving your account every month for five years. If your budget is tight, or you just don’t want to think about it, that matters.
Fewer switches. That means fewer fees and less hassle along the way.
It can sometimes help you borrow more. Some lenders work out what you can afford differently on longer fixes, so a five-year deal might actually give you a bit more room. It varies by lender and depends on your circumstances.
The catch: you’re tied in for longer. Early repayment charges on five-year deals can last the whole five years, and they’re often bigger in the early years. If your plans change, getting out can cost you.
The questions that actually decide it
Forget trying to predict rates. Ask yourself these instead.
Could you move in the next five years? Some deals can be taken with you to a new home (this is called “porting”), but not all, and the lender still has to approve you and the new property.
How much wiggle room is in your budget? If a jump in payments in two years would really hurt, certainty is worth something.
Do you plan to pay off a lump sum? Many lenders let you overpay up to 10% a year without a charge. Anything above that during your deal could cost you.
What’s the total cost, not just the rate? A deal with a lower rate and a big fee isn’t always cheaper. Look at the whole cost over the time you’ll actually have it.
Is a tracker worth a look? A tracker follows the Bank of England’s rate, so your payments move up and down with it. It’s not for everyone, especially with a rate decision due on 5 November, but it’s worth understanding the option.
Don’t let the decision stall you
The worst outcome isn’t picking the “wrong” fix. It’s doing nothing and ending up on your lender’s standard variable rate, which is usually much higher than their other deals.
If your current deal ends in the next few months, you can often secure your next rate well in advance. We’ve explained how in Mortgage Rates Are Rising: When Can You Lock In Your Next Rate?.
How we help
We don’t have a favourite fix. We look at your plans, your budget and the whole market, then talk you through the options in plain English, including what each one could cost if life changes.
One person from start to finish. Whole of market. No pressure.
This is general information, not personal advice. Rates and lender criteria change all the time, and the right choice depends on your circumstances. The best next step is a chat about yours.
Weighing up two years or five? Book a free chat, call us on 0151 440 3500 or email hello@ngmortgages.co.uk. Let’s get it sorted.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.