Property buyers are increasingly opting for two-year fixed-rate mortgages despite higher rates, according to new data from financial comparison site Moneyfacts, prompting warnings from industry body Propertymark about basing decisions solely on rate forecasts.
The share of website users comparing two-year fixed-rate mortgages increased from 48.4% in February to 55.6% in May, while demand for five-year fixed deals fell from 27.7% to 21.8%. Searches for 10-year fixed-rate mortgages also declined, dropping from 6.5% to 4.5%.
Rate premium accepted
The trend persists despite five-year fixed mortgage rates averaging 5.68% in May, lower than the 5.78% average for two-year fixes. Borrowers appear willing to accept a premium in anticipation of refinancing at lower rates within a shorter timeframe.
Mary-Lou Press, President at NAEA Propertymark, said: “What’s particularly interesting is that we’re seeing buyers place a greater emphasis on flexibility than simply securing the lowest rate available. Many borrowers are conscious that their circumstances may change over the next few years, whether that’s moving home, upsizing or reviewing their borrowing position, and shorter-term fixes can provide more options when those decisions arise.”
However, she cautioned: “Borrowers should avoid making decisions based solely on rate forecasts.”
Market expectations
Adam French, Head of Consumer Finance at Moneyfacts, said: “It appears many borrowers believe the recent spike in mortgage rates will prove temporary, and are willing to pay a small premium for a shorter fix in the expectation that they will be able to refinance onto a more competitive deal in the future.”
He added: “The continued decline in demand for 10-year fixes backs this up. Unsurprisingly, borrowers are reluctant to commit to today’s rates for the long term, despite the payment certainty these products can offer.”
The shift in borrower behaviour comes as the property market navigates ongoing regulatory scrutiny of industry practices and broader economic uncertainty. With housing affordability remaining a key concern, mortgage product selection has become increasingly strategic for buyers balancing immediate costs against future flexibility.
The data suggests borrowers are making calculated assessments about interest rate trajectories, prioritising the ability to remortgage sooner over immediate rate savings.
