3-year fixes the new 2-year

We've done more 3-year fixed deals in the last few months than ever before. I've always been a fan personally, as they help bridge the gap between 2 and 5. A 'sitting on the fence' kind of product. People often don't want to over-commit on a 5-year deal, especially given the current rate levels. Also, 2-years is possibly too soon for the market to recover, and people are fearful they'll still remortgage onto a high rate in 24-months time.

Our brokerage has been witnessing a growing interest in three-year fixed-rate mortgages. This option is gaining popularity among borrowers who see it as the perfect balance between a two-year and a five-year fixed-rate mortgage. Furthermore, many borrowers anticipate a much-improved economic landscape three years from now. However, the limited availability of lenders offering this three-year option can somewhat constrain their choices.

3 year products are gaining traction, at the moment even though they are better value the majority of clients think that is too long and that they would end up over paying in the long run, at the same time they also think a 2 year product is probably a bit too short to see a substantial decrease in rates, rates are like fuel prices at the petrol station, quick to rise and very slow to fall, people are aware of this and feel 2 years is too short. This is leaving them caught in a quandary and with only a few lenders doing a 3 year product they are limited in their options. But we are seeing more clients opting for this and it probably is the prudent option.
Hopefully we will see more lenders providing more 3 year products as there is definitely a lot of demand for them at the moment.

Despite a restricted lender choice - with nearly a third of mainstream lenders still skipping out on three-year deals - I've personally seen more clients keen to lock in 3-year fixed deals than ever before. It feels for many like the perfect middle ground option- not too short, not too long.

Although cheaper, many are hesitant to commit to locking in the current rates with the longer-term deals but two years for many is seen as jumping the gun and just a little too short to be rolling the dice on any hoped for market recovery.

I have not seen a shift to 3 years, the margins between 2 2,3 and 5 are still such that the majority of clients are still looking at 5-year fixed rates based on the rates.
When advising clients it isn't always a case of second-guessing what rates could or could not do, sometimes it is more important to look at a client's circumstances and design a mortgage around that.
The demand for 5 years is still out stripping demand for 2 and 3 years.

Three-year fixed rates can very much be the "Goldilocks deal" for some people; two years is too short, five years is too long, but three years is just right. As with all things mortgage-related, there is no perfect solution for everyone and three-year deals will be ideal for some people, but not others, it does give people more choices though and it's nice to see them growing in popularity with lenders, giving clients a little more scope than just 2- or 5-year options.

Three-year fixes have been seen lately as the bridge between the 2 and 5-year deals, sometimes the 5 is too long, but the deals are much better, and the 2 has an awful rate - which is where the 3-year deals have been useful as middle ground. Lately, however, we are seeing, due we think to the ongoing lender price war, the 2-year fixes be released at lower levels and if this move continues it will be great news for UK mortgage holders renegotiating their rates.