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How long homeowners should fix new mortgage deal for as interest rates tumble: "The two-year fix saves you roughly £3,000 to £4,000"

Journalist: Laura Purkess, Freelance

ended 27. February 2026

EXPERTS have shared how long homeowners should fix a new mortgage deal for as interest rates continue to fall. One claimed a two-year fix could save you up to £4,000 over five years while others said trying to outguess interest rates is a “mistake”.

Inflation has fallen to 3% and Bank of England (BoE) Governor Andrew Bailey this week said that a fall to 2% is “baked-in” by May.

The BoE is expected to cut its base rate next month and lenders have been cutting their mortgage rates this year with swap rates tumbling.

But with interest rates on the way down, should you lock in a two-year fixed mortgage or a five-year one?

Matthew Davies, co-founder of Opes Financial Partners, claimed a two-year fixed rate was the way to go because it would save you up to £4,000 over five years.

He added: "If you believe rates will drop to 3.25% by 2028 (as many analysts suggest), the two-year fix saves you roughly £3,000 to £4,000 over the five-year period, even after paying two sets of fees for a loan amount of £500,000. If inflation continues to fall and rates are cut faster then savings could be even higher by taking a tracker mortgage.  

"We are seeing most clients opting to take two-year fixed rate mortgage products as tracker margins are a little high at the moment. Falling inflation now at 3% is paving the way for faster interest rate cuts, promising a boost for borrowers, and making mortgages more affordable. 

“Lenders compete aggressively as rates fall because lower borrowing costs allow them to slash pricing while maintaining margins, sparking a race for market share as they battle to capture an uptake in buyer demand.”

Craig Fish, Director at London-based Lodestone Mortgages, said you should just choose based on your personal circumstances.

He continued: "This question always comes up when there’s a feeling rates will fall. But choosing a 2-year fix now purely to switch onto something cheaper later is effectively trying to time the market and that’s a gamble. It’s a bit like walking into a casino and putting everything on red or black. 

"Two consecutive 2-year fixes only work out cheaper if rates fall quickly and materially, and the savings outweigh product fees and switching costs. If they don’t, borrowers can end up worse off. 

“The last five years have shown that obsessing over the ‘best rate’ isn’t a strategy because the market will always win. The choice should be driven by personal circumstances , certainty, flexibility, moving plans and risk tolerance.”

Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, said it is very hard to predict.

She added: "The biggest mistake borrowers make when choosing between a two or five-year fix is trying to outguess interest rates. Rate predictions should be the last factor in the decision. We might anticipate the next Bank of England move, but nobody can reliably forecast where rates will be in two or three years’ time, too much depends on global economics and politics. 

"The length of a fixed rate should be based entirely on personal circumstances. If a borrower has a low loan to value and major commitments approaching, such as supporting a child through university, a five-year fix can provide stability and predictable budgeting. 

“By contrast, someone at 94% LTV who is regularly overpaying may benefit from a shorter fix. Reducing the balance could move them into a lower LTV band within two years, potentially unlocking cheaper rates. Mortgage strategy is about life planning and financial positioning not rate gambling. It’s time to educate and help clients make informed decisions based on real life.”


 

5 responses from the Newspage community

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Editor
Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
The biggest mistake borrowers make when choosing between a two or five year fix is trying to outguess interest rates. Rate predictions should be the last factor in the decision. We might anticipate the next Bank of England move, but nobody can reliably forecast where rates will be in two or three years’ time too much depends on global economics and politics.
The length of a fixed rate should be based entirely on personal circumstances. If a borrower has a low loan to value and major commitments approaching, such as supporting a child through university a five year fix can provide stability and predictable budgeting.
By contrast, someone at 94% LTV who is regularly overpaying may benefit from a shorter fix. Reducing the balance could move them into a lower LTV band within two years, potentially unlocking cheaper rates.
Mortgage strategy is about life planning and financial positioning not rate gambling.
It’s time to educate and help clients make informed decisions based on real life.
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Editor
Craig FishVerified
Director at Lodestone Mortgages
This question always comes up when there’s a feeling rates will fall. But choosing a 2-year fix now purely to switch onto something cheaper later is effectively trying to time the market and that’s a gamble. It’s a bit like walking into a casino and putting everything on red or black. Two consecutive 2-year fixes only work out cheaper if rates fall quickly and materially, and the savings outweigh product fees and switching costs. If they don’t, borrowers can end up worse off. The last five years have shown that obsessing over the “best rate” isn’t a strategy because the market will always win. The choice should be driven by personal circumstances , certainty, flexibility, moving plans and risk tolerance.
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Editor
Shaun SturgessVerified
Director at Sturgess Mortgage Solutions
How long you should fix for will always come down to you. For example, views on interest rates, whether you are happy to be locked into a rate for longer as it will give you certainty of payments, whether you plan to upsize or downsize in the not-too-distant future and countless other factors. Risk tolerance and circumstances are key and no borrower is the same. This is where advisers come into their own and explain the pros and cons of each choice.
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Annabelle Schaathun Cole0
Founder & Director at Sigrid Media
Quote from Matthew Davies, co-founder of Opes Financial Partners: "If you believe rates will drop to 3.25% by 2028 (as many analysts suggest), the 2-year fix saves you roughly £3,000-£4,000 over the five-year period, even after paying two sets of fees for a loan amount of £500,000. If inflation continues to fall and rates are cut faster then savings could be even higher by taking a tracker mortgage.  We are seeing most clients opting to take 2 year fixed rate mortgage products as tracker margins are a little high at the moment." "Falling inflation now at 3% is paving the way for faster interest rate cuts, promising a boost for borrowers, and making mortgages more affordable. Lenders compete aggressively as rates fall because lower borrowing costs allow them to slash pricing while maintaining margins, sparking a race for market share as they battle to capture an uptake in buyer demand."
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Omer MehmetVerified
Managing Director at Trinity Finance
To fix or not to fix is one of the time-honoured questions of the mortgage world and there is no easy answer. Ultimately, it all comes down to to where you think are rates are headed and your personal circumstances and risk profile. With the base rate looking highly likely to be cut at least once or twice again this year, better rates could be available by the summer. Of course, a Black Swan event could happen, such as a material escalation in tension between Iran and the US, and rates could rise again if inflation starts to return on the back of rising oil prices. For many people, locking into a 5-year fix can be the perfect thing, for others it can feel a little restrictive.