New data from the Bank of England shows that UK borrowers are currently favouring two-year fixed-rate mortgages over longer terms.
In Q2 this year:
• 50% of new mortgages were two-year fixed deals
• 35% opted for five-year terms
Many borrowers appear to be hoping they can remortgage onto cheaper rates if the Bank Rate continues to fall over the next couple of years. This marks a shift in behaviour compared to 2022, when rising rates pushed more buyers towards longer five-year fixes for certainty.
That said, longer fixed-rate deals are still worth considering. Analysts do not expect mortgage rates to return to the record-low levels seen in 2021. Instead, they believe rates could settle at a higher level, potentially around 3.5%. It’s also worth noting that expected future base rate cuts are often already factored into fixed-rate mortgage pricing.
If you’re deciding on your next move, getting professional advice can help you choose the deal that best suits your plans.
Sources:
MSN – Half of mortgage borrowers fix for two years – are they being too optimistic about rate cuts?
https://www.msn.com/en-gb/news/other/half-of-mortgage-borrowers-fix-for-two-years-are-they-being-too-optimistic-about-rate-cuts/ar-AA1OWSr5
This Is Money – HALF of mortgage borrowers fix for two years as rate cut hopes grow
https://www.thisismoney.co.uk/money/mortgageshome/article-15128641/HALF-mortgage-borrowers-fix-two-years-optimistic-rate-cuts.html
