Providing expert mortgage advice for over 28 years.
Providing expert mortgage advice for over 28 years.
UK mortgage rates are stabilising in 2025, offering more predictability for homebuyers.
The average 2-year fixed rate mortgage and 5-year fixed rate mortgage are now both around 4.50%, with some lower interest rate deals available.
The Bank of England base rate is currently 4% (as of August 2025), following a recent cut.
Inflation stands at 3.6%, still above the 2% target, influencing market outlook.
Choosing the right type of mortgage depends on your risk tolerance, budget, and personal circumstances.
If you’re considering a new mortgage or remortgaging, you’ll be pleased to hear that mortgage rates have shown signs of improvement. As of August 2025:
The average 2-year fixed mortgage rate is 4.50%, with some lenders offering rates from 3.69%.
The average 5-year fixed mortgage is also 4.50%, with some lenders offering rates from 3.84%.
These rates are based on mortgage products with a standard fee (circa £999) and vary by loan-to-value (LTV) and applicant profile.
Meanwhile, the Bank of England’s base rate was reduced to 4% in August, its lowest point since 2023. Though inflation ticked up to 3.6%, experts believe further base rate cuts may occur by the end of the year—but this is not guaranteed.
A fixed rate mortgage locks in your interest rate for a fixed period (typically 2, 5 or even 10 years). This means your monthly mortgage payments will remain the same, giving you financial stability and protection from potential rate changes.
Predictable monthly repayments, aiding budgeting
Protection from interest rate rises during the term
Peace of mind for a set period of time
However, fixed rates are not for everyone. If you want flexibility, expect to move soon, or think rates will fall, a variable rate mortgage could be a better deal.
A variable rate mortgage is one where the interest rate can fluctuate during the mortgage term. These come in a few types:
Standard Variable Rate (SVR): Set by the mortgage lender, this can go up or down at their discretion. Your payments are less predictable and usually higher than initial fixed deals.
Tracker Mortgage: Tracks the Bank of England base rate plus a set percentage. If the base rate goes down, your rate (and monthly payments) may decrease as well.
Potential for lower monthly repayments if rates fall
Often lower initial rates than fixed mortgages
Suitable for those who can afford potential increases
Mortgage repayments can increase with rate rises
Harder to plan long-term finances
No protection against market shifts
A 2-year fixed rate mortgage is considered a short term option. It allows you to fix your rate for a couple of years, then re-evaluate.
Lower initial interest rate: Currently as low as 3.69%
Flexibility: Remortgage after two years if new deal options improve
Typically lower early repayment charges
You’ll need to find a new mortgage deal after the 2-year period, which can come with fees
Vulnerable to higher interest rates when you remortgage
Less stability for long term financial planning
This is often a good option if you expect to move soon or believe rates will drop. If you’re wondering about a 2 year fixed rate mortgage or 5 year, the answer will depend on your outlook on interest trends and how long you plan to stay in the property.
A 5-year fix offers a longer period of certainty, popular with homeowners seeking financial stability.
Fixed interest rate means no surprises in your monthly repayments
Avoid frequent remortgaging costs and hassle
Protection from interest rate rises for a longer term
May miss out on a better deal if rates fall
Less flexibility, you might face early repayment charges if you switch
Slightly higher interest rate than shorter-term deals
This is often the right choice if you’re settled and want to protect your household budget for the long term. Still undecided between a 2 year fixed rate or 5 year fixed rate? Consider how long you expect to stay in the home and how much rate certainty matters to you.
Some lenders also offer 10-year fixed rate mortgages. These are great for borrowers who want long-term certainty, but they come with:
Higher interest rates up front
Longer early repayment charge periods
Less flexibility if your circumstances change
That said, a longer fixed term can be a good idea if you don’t plan to move and want stable mortgage payments.
The best mortgage choice depends on your:
Personal circumstances (job stability, plans to move, family needs)
Tolerance for rate changes
Financial goals over the next 2 to 10 years
When comparing options:
Use our mortgage calculator to estimate monthly repayments
Speak to an expert mortgage adviser to assess affordability and products
Consider all fees, not just the current rate
We can help you compare over 75 mortgage lenders and find the right option for your needs.
With the Bank of England base rate at 4% and inflation still above target, now could be a strategic time to secure a fixed rate period before the market shifts.
Whether you prefer a short term 2-year fix or a more stable 5-year period, the key is choosing a type of mortgage that matches your situation.
We’re here to support you in finding the right deal, whether you’re applying for a new mortgage loan or reviewing your existing arrangement
It depends on your goals. A 2-year fixed rate mortgage offers flexibility and lower early repayment charges, while a 5-year fixed mortgage provides greater financial stability and protects you from interest rate rises over a longer period.
If you think rates may drop further, a 2-year deal could help you access a better deal in the near future. If you prefer certainty and want to avoid frequent remortgaging, a 5-year fixed rate mortgage may be the right choice.
If you think rates may drop further, a 2-year deal could help you access a better deal in the near future. If you prefer certainty and want to avoid frequent remortgaging, a 5-year fixed rate mortgage may be the right choice.
Both types lock in your mortgage interest rate for a fixed period. A 2-year fix generally has a lower starting rate but exposes you to more frequent rate changes. A 5-year fix costs more initially but offers predictable monthly repayments for longer.
The right option depends on your financial goals and personal circumstances. If you’re risk-averse and value stability, a 5-year fix may suit you better. If you’re planning to move or refinance soon, a 2-year fix could be more cost-effective.
A fixed-rate buy-to-let mortgage is a type of loan designed for property investors. It provides a fixed interest rate over a set term, commonly two or five years, allowing landlords to forecast monthly repayments accurately. This can be a good option for managing rental income and mortgage expenses over a defined period.
At New Homes Mortgage Services LLP, we strive to provide accurate and up-to-date information at the time of publication. However, due to the dynamic nature of the property market, details may change and this content is intended for general informational purposes only. It does not constitute financial or professional advice and should not be relied upon as such.
We cannot accept responsibility for any decisions made based on this information. For advice tailored to your individual circumstances, please consult our qualified mortgage advisors. We recommend that you independently verify any important details before making financial commitments.
